At a November 8 program on “Funds’ Use of Derivatives” sponsored by the Mutual Fund Directors Forum in New York, Gene Gohlke, Associate Director of the Securities and Exchange Commission Office of Compliance Inspections and Examinations, offered an extensive outline of questions that mutual fund directors should pursue if their funds are investing in derivatives. After noting the oversight responsibilities of directors, Gohlke presented detailed questions focusing on 12 areas of risk attendant to derivatives investing. These focus areas cover the adviser’s intellectual and financial resources, due diligence processes, risk management functions, risk disclosure, prevention of inappropriate use of non-public fund derivatives information, illiquidity measuring and monitoring, embedded or economic leverage measuring and monitoring, valuation, sufficiency of back office services, effectiveness of compliance procedures and compliance testing, the chief compliance officer’s role, and types of derivative risk/return information provided to the fund’s board regularly and under exceptional circumstances.