IACI » Topics » Derivatives not designated as hedges

This excerpt taken from the IACI 10-K filed Mar 31, 2005.

Derivatives not designated as hedges

        The Partnership must meet specific criteria in order to apply hedge accounting. The Partnership uses derivatives to hedge exposures when it makes economic sense to do so, including circumstances in

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which the hedging relationship does not qualify for hedge accounting as described in the following paragraph. The Partnership also will occasionally receive derivatives, such as equity warrants, in the ordinary course of business. Although these instruments are considered to be derivatives, their economic risk is similar to, and managed on the same basis as, other equity instruments the Partnership holds. Derivatives that do not qualify for hedge accounting are marked to market through operations.

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