Taiwan Issues Derivatives Rulings

Washington, DC, February 8, 2002 - The Taiwan Securities and Futures Commission issued two rulings on January 15 clarifying the criteria to register foreign mutual funds for sale in Taiwan.

One of the requirements for a foreign fund to be approved for sale in Taiwan is that the fund's prospectus includes a statement that derivatives comprise less than fifteen percent of the fund's portfolio. The rulings define "derivatives" for this purpose, and clarify that certain currency forward contracts and currency swaps may be excluded for purposes of the fifteen-percent test, provided they are used for bona fide risk hedging. The rulings also clarify the value that should be used in the calculation with respect to options and other derivative investments.