European Parliament Committee Proposes New Amendments to UCITS Directive

Washington, DC, February 7, 2000 - The Committee on Economic and Monetary Affairs of the European Parliament issued a report on February 1, 2000, recommending amendments to the Directive relating to the regulation of collective investment vehicles. These recommendations follow two European Commission previous proposals to amend the Directive.

The Committee's report recommends that UCITS be permitted to invest in other collective investment undertakings as well as in other UCITS. The Committee did not propose to permit member states to authorize master-feeder arrangements.

The Committee's proposal would allow investments by UCITS in other UCITS and non-UCITS funds subject to certain qualitative and quantitative conditions. First, the proposal would require that non-UCITS funds be subject to supervision equivalent to UCITS, that investors in non-UCITS funds be afforded protection equal to that provided to investors in UCITS, and that non-UCITS funds issue annual and semi-annual reports. Second, the proposal would prohibit a UCITS from investing more than 10 percent of its assets in units of a single UCITS or non-UCITS fund and more than 30 percent of its assets in non-UCITS funds in the aggregate. Finally, the proposal would prohibit a UCITS from investing in another UCITS or non-UCITS fund that, in turn, invests more than 10 percent of its assets in units of other UCITS or other collective investment undertakings. The Committee's proposal also would require UCITS to disclose that they invest in other UCITS and non-UCITS funds.

The European Parliament is expected to vote on the Committee's proposed amendments on February 18, 2000.