Most corporations provide at least some information on their derivatives activity in annual reports, but few specify whether the instrument they use contained any form of leverage, according to a recent study by the Financial Accounting Standards Board.

The FASB study found that 51 of the 65 Fortune 1000 companies surveyed, or 78%, disclosed some sort of information about derivatives activity in their annual reports, but none provided a discussion of leverage features. Four took the trouble to explicitly state that some or all of their derivatives did not contain leverage features.

Among the 10 largest dealers, only four acknowledged the use of derivatives with leverage features.

An accounting board rule issued two years ago suggests a discussion of leverage features be included so as to prevent the notional amount of derivatives in the disclosure from being "misleading."

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