(1) A feeder UCITS is a UCITS, or sub-fund thereof, which has been approved to invest, by way of derogation from Regulations 4(3) (a), 68, 70 and 74(2) (a) (iii), at least 85% of its assets in units of another UCITS or sub-fund thereof (the master UCITS).
(a) A feeder UCITS may hold up to 15 % of its assets in one or more of the following:
(i) ancillary liquid assets in accordance with subparagraph 2 of Regulation 68;
(ii) financial derivative instruments, which may be used only for hedging purposes, in accordance with Regulations 68(1) (g) and 69(2) to (4);
(iii) movable and immovable property which is essential for the direct pursuit of the business, if the feeder UCITS is an investment company.
(b) For the purposes of compliance with Regulation 69(2) to (4), the feeder UCITS shall calculate its global exposure related to financial derivative instruments by combining its own direct exposure under clause (ii) of paragraph (a) with either -
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