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(Concluded) 

6. FINANCIALASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS 

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Chunghwa entered into investment management agreements with well-known financial institutions (fund managers) to manage its investment portfolios in 2006. The investment portfolios managed by these fund managers aggregated to an original amount of US$100 million. Chunghwa terminated the investment management agreements on March 2, 2009 and asked fund managers to dispose of all the investment portfolios. The fund managers had disposed of all investment portfolios before June 23, 2009 and returned the proceeds to Chunghwa. 

The Company entered into currency swap contracts and forward exchange contracts to reduce its exposure to foreign currency risk and variability in operating results due to fluctuations in exchange rates. However, the aforementioned derivatives did not meet the criteria for hedge accounting and were classified as financial assets or financial liabilities held for trading. 

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