ASC Topic 815, "Derivatives and Hedging," requires companies to measure foreign currency forward contracts
at fair value, derived by discounting the difference between the contract rate and the current forward rate to the settlement date.
All of Deutsche Bank's currency-hedged ETFs are fully hedged with currency forward contracts
, as is the WisdomTree fund.
By investing in their related unhedged, parent iShares ETFs (EFA, EWG and EWJ) and implementing foreign currency forward contracts
, iShares Currency Hedged ETFs provide an easy and cost-effective way to mitigate unwanted currency risk.
As a result, income before foreign currency forward contracts
(gains)/losses, finance and income tax expenses of CAN 7.0m decreased CAN 591k, or 8%.
These considerable factors include the use of short and long positions in commodity futures contracts, swaps, currency forward contracts
and other derivatives.
Moreover, Field Service Advice (FSA) 200025020 (issued prior to Notice 200381, which was modified and supplemented by Notice 2007-71) provided the following reasoning: Although the definition of a foreign currency contract provided in 1256(g)(2) may be read to include a foreign currency option contract, the legislative history of the Technical Corrections Act of 1982, which amended 1256 to include foreign currency contracts, indicates that the Congress intended to extend [section] 1256 treatment only to foreign currency forward contracts
that are traded on the interbank market.
We attempt to hedge our foreign exchange (FX) exposure to currency fluctuation by using derivatives, e.g., currency forward contracts
(which lock in the price of a currency for settlement at a specified future date).
FX management traditionally has involved the purchase of currency forward contracts
to achieve offsetting results (hedging) and debt management in local or home country currencies.
They also invest in their unhedged parent ETFs--iShares MSCI EAFE (EFA), Germany (EWG) and Japan (EWJ)-- and implementing foreign currency forward contracts
, the hedged ETFs provide a way to mitigate unwanted currency risk.
Foreign Currency Forward Contracts
for Forecasted FX Transactions
If it is determined that particular foreign currency forward contracts
are not subject to Sec.