Notes to Financial Statements
Interest rate swap contracts
Interest rate swaps involve the exchange by the Portfolio with another party of their respective commitments to
pay or receive interest, e.g., an exchange of floating rate payments for fixed rate payments with respect to a
notional amount of principal. Credit and market risk exist with respect to these instruments. If forecasts of interest
rates and other market factors are incorrect, investment performance will be diminished compared to what
performance would have been if these investment techniques were not used. Even if the forecasts are correct,
there are risks that the positions may correlate imperfectly with the asset or liability being hedged, a liquid
secondary market may not always exist, or a counterparty to a transaction may not perform. The Portfolio
expects to enter into these transactions primarily for hedging purposes including, but not limited to, preserving a
return or spread on a particular investment or portion of its portfolio, protecting against currency fluctuations,
managing duration or protecting against an increase in the price of securities the Portfolio anticipates purchasing at
a later date. Gains and losses are realized upon the expiration or closing of the swap contracts.
At December 31, 1998, the Portfolio held no interest rate swap contracts.
(6) Delayed Delivery Transactions:
The Fund may purchase securities on a when-issued or forward commitment basis. Payment and delivery may
take place a month or more after the date of the transactions. The price of the underlying securities and the date
when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. The Portfolio
instructs its custodian to segregate securities having a value at least equal to the amount of the purchase
commitment.
At December 31, 1998, the Fund entered into the following delayed delivery transactions:
When Issued
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Type Security Settl