NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Debt Strategies Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940 as a diversified,
closed-end management investment company. The Fund's financial statements are prepared in accordance with
generally accepted accounting principles which may require the use of management accruals and estimates. The
Fund determines and makes available for publication the net asset value of its Common Stock on a weekly basis.
The Fund's Common Stock is listed on the New York Stock Exchange under the symbol DBS.
(a) Corporate debt obligations--The Fund invests principally in debt obligations of companies, including
corporate loans made by banks and other financial institutions and both privately and publicly offered corporate
bonds and notes. Because agents and intermediaries are primarily commercial banks, the Fund's investment in
corporate loans could be considered concentrated in financial institutions.
(b) Valuation of investments--Corporate Loans will be valued in accordance with guidelines established by the
Board of Directors. Under the Fund's current guidelines, Corporate Loans for which an active secondary market
exists and for which the Investment Adviser can obtain at least two quotations from banks or dealers in
Corporate Loans will be valued by calculating the mean of the last available bid and asked prices in the markets
for such Corporate Loans, and then using the mean of those two means. If only one quote for a particular
Corporate Loan is available, such Corporate Loan will be valued on the basis of the mean of the last available bid
and asked prices in the market. For Corporate Loans for which an active secondary market does not exist to a
reliable degree in the opinion of the Investment Adviser, such Corporate Loans will be valued by the Investment
Adviser at fair value, which is intended to approximate market value.
Other portfolio securities may be valued on the basis of prices furnished by one