August 3, 1994
TO: ACCOUNTING/TREASURERS MEMBERS NO. 22-94
BOARD OF GOVERNORS NO. 70-94
MEMBERS - ONE PER COMPLEX NO. 56-94
SEC RULES MEMBERS NO. 53-94
RE: INSTITUTE MEMORANDUM ON FUND INVESTMENTS IN DERIVATIVES
__________________________________________________________
At the request of the Institute's Investment Issues Committee
(a subcommittee of the Board of Governors), the Institute has
prepared the attached memorandum on fund investments in
derivatives. Derivatives generally, and fund investments in
derivatives in particular, have been the focus of increased
scrutiny in recent months by Congress, federal and state
regulators, investors and the press. It is likely that such
scrutiny will continue. Accordingly, it is important that fund
directors and senior management of investment advisers continue to
exercise particular diligence with respect to their oversight and
compliance responsibilities in this area. The memorandum is
intended to assist in this regard. It provides information
concerning derivative instruments, discusses certain regulatory and
other issues that may arise in connection with fund investments in
such instruments, and identifies some possible areas for inquiry
and consideration by fund directors and investment advisers.
Questions on the memorandum or related issues may be directed
to Paul Stevens at (202) 326-5810, Craig Tyle at (202) 326-5815 or
Frances Stadler at (202) 326-5822.
Matthew P. Fink
President
Attachment