NOTES TO FINANCIAL STATEMENTS
this method does not represent fair value. Securities for which market quotations are not readily available are
valued at fair value as determined in good faith by, or in accordance with procedures approved by, the Board of
Directors. Fixed income securities may be valued on the basis of prices provided by a pricing service when such
prices are believed to reflect the fair market value of such securities.
Mortgage backed and asset backed securities may be valued at prices obtained from a bond pricing service or at
a price obtained from one or more of the major broker/ dealers in such securities. In cases where broker/dealer
quotes are obtained, the Adviser may establish procedures whereby changes in market yields or spreads are
used to adjust, on a daily basis, a recently obtained quoted bid price on a security.
It is the policy of the Portfolio to meet the requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its investment company taxable income and net realized gains, if any,
to shareholders. Therefore, no provisions for federal income or excise taxes are required.
3. Offering Expenses
Offering expenses of $121,000 had been deferred and were amortized on a straight line basis through June 30,
4. Investment Income and Investment Transactions
Interest income is accrued daily. Investment transactions are accounted for on the date securities are purchased
or sold. The Portfolio accretes discounts as adjustments to interest income. Investment gains and losses are
determined on the identified cost basis.
5. Income and Expenses
All income earned and expenses incurred by the Portfolio are borne on a pro-rata basis by each settled class of
shares, based on proportionate interest in the Portfolio represented by the net assets of such class, except that the
Portfolio's Class B and Class C shares bear higher distribution and transfer agent fees than Class A shares.
6. Dividends and Dist