Task Force Reports on Use of Derivatives by UCITS Funds

Washington, DC, March 19, 2003 - A task force, established by the UCITS Contact Committee to study UCITS funds’ use of financial derivative instruments, recently released a report on, among other things:

• limitations on leverage;
• definition of global exposure and formulas for calculating global investment limits;
• definition of exposure for application of concentration limits;
• definition of cover;
• definition of hedging operations;
• methodologies for assessing counterparty risk; and
• the use of financial derivative instruments by passively managed UCITS funds.

The findings of the task force are expected to be adopted by the UCITS Contact Committee at its May meeting. The report will likely be the basis for a common implementation of the amended UCITS Directive.