NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION ............................ Mentor Income Fund, Inc. ("the fund") is registered under the
Investment Company Act of 1940 as a diversified, closed-end management investment company. Fund shares
are listed on the New York Stock Exchange under the symbol MRF.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ............................
INVESTMENTS IN SECURITIES
Portfolio securities for which market quotations are
readily available are valued at current market value. If
market quotations or valuations are not readily available,
or if such quotations or valuations are believed to be
inaccurate, unreliable or not reflective of market value,
portfolio securities are valued according to procedures
adopted by the fund's board of directors in good faith at
"fair value", that is, a price that the fund might
reasonably expect to receive for the security or other
asset upon its current sale.
The current market value of certain fixed income securities is provided by an independent pricing service. Fixed
income securities for which prices are not available from an independent pricing service but where an active
market exists are valued using market quotations obtained from one or more dealers that make markets in the
securities or from a widely-used quotation system. Short-term securities with maturities of 60 days or less are
valued at amortized cost, which approximates market value.
Securities transactions are accounted for on the date securities are purchased or sold. Realized gains and losses
are calculated on the identified-cost basis. Interest income, including amortization of bond discount and premium,
is recorded on an accrual basis.
REVERSE REPURCHASE AGREEMENTS
Reverse repurchase agreements involve the sale of a
portfolio-eligible security by the fund, coupled with an
agreement to repurchase the security at a specified date
and price. Reverse repurchase agreements may increase
volatility of the fund's net asset value and