International Accounting Board Confirms Interpretation on Fund Shares

Washington, DC, November 27, 2001 - The Standing Interpretations Committee of the International Accounting Standards Board recently confirmed Interpretation SIC-D34 Financial Instruments-Instruments or Rights Redeemable by the Holder. The interpretation addresses the financial statement presentation of shares issued by unit trusts, mutual funds, and other investment enterprises. Notwithstanding public comments, the interpretation concludes that fund shares are liabilities since they enable the holder to redeem or "put" the shares to the issuer for cash. As a result, entities that issue redeemable shares will report no equity or net assets for financial accounting purposes.

The interpretation has no effect on U.S. registered investment companies, which are subject to U.S. generally accepted accounting principles. Several European countries currently permit, but do not require, adoption of international accounting standards. The European Commission recently issued a proposal that would require adoption of international accounting standards by companies listed in European Union member states for fiscal years starting on or after January 1, 2005.