We use cross-currency swaps and forward contracts to hedge debt that is denominated in foreign currencies. We also use forward contracts to hedge foreign currency risk on anticipated transactions. Derivatives that qual- ify for hedge accounting, and the underlying hedged items, are marked to current rates. The principal amount to be received under currency contracts was US$675 million at December 31, 2004. The principal amount to be paid under these contracts was $902 million at December 31, 2004. During 2004, we designated US$57 million of debt as a hedge of part of our net investment in self- sustaining foreign subsidiaries. We have also issued swaptions for the right to enter into interest rate swap transactions for a notional amount of $90 million. If exercised, these swaptions will involve the payment of fixed interest rates of 10.5% and 11.1% in exchange for the receipt of the three-month bankers’ acceptance floating rate from 2006 until maturity in 2013. Fair value is the amount that willing parties would accept to exchange a financial instrument based on  the current market for instruments with the same  risk, principal and remaining maturity. We base fair values on estimates using present value and other  valuation methods. These estimates are affected significantly by our assumptions for the amount and timing of estimated future cash flows and discount rates, which all reflect varying degrees of risk. Potential income taxes and other expenses that would be incurred on disposition of these financial instruments are not reflected in the fair values. As a result, the fair values are not necessar- ily the net amounts that would be realized if these instruments were actually settled. The carrying value of all financial instruments approximates fair value, except for those noted in the table below. (1) We have designated four million of our approximately 14 million Nortel common shares to manage our exposure to outstanding rights to SCPs. (2) Currency contracts include cross-currency interest rate swaps and foreign currency forward contracts. Some of the cross-currency interest  rate swaps are economic hedges that do not qualify for hedge accounting. We carry these at fair value and all gains or losses are recorded in the statement of operations. Bell Canada Enterprises  2004 Annual Report 107 2004 2003 CARRYING FAIR CARRYING FAIR VALUE VALUE VALUE VALUE Investment in Nortel  (1) 54 59 57 77 Long-term debt due within one year 1,121 1,134 1,140 1,154 Long-term debt 11,809 13,747 12.381 14,250 Derivative financial instruments, net asset (liability) position: Forward contracts –  BCE Inc. shares (37) (41) (37) (41) Currency contracts  (2) (74) (97) (92) (97) Interest rate swaps  (10) (29) (9) (25) Fair Value Interest Rate Exposures Currency Exposures • on $75 million of swaps we pay interest at a rate of 3.2%. We receive interest on these swaps at a rate equal to the three-month bankers’ acceptance floating rate.  • on $100 million of swaps we pay interest at a rate equal to a three-month bankers’ acceptance floating interest rate plus 2.1%. We receive interest on these swaps at a rate of 6.8%.  We use interest rate swaps to manage the mix of  fixed and floating interest rates on our debt. We have entered into interest rate swaps with a notional amount of $195 million, maturing in 2006 and 2011, as follows: • on $20 million of swaps we pay interest at a rate of 4.7%. We receive interest on these swaps at a rate equal to the three-month bankers’ acceptance floating rate.