Notes to Financial Statements
December 31, 1996 (continued)
1. Summary of Significant Accounting Policies (continued)
B. Option Contracts
The Funds may purchase put and call options and write put and covered call options as a hedge against adverse movements in the value of
portfolio holdings or to increase market exposure.
Option contracts are valued daily. Unrealized gains or losses are recorded based upon the last sales price on the principal exchange on
which the option is traded.
The Funds will realize a gain or loss upon the expiration or closing of the option contract. When an option is exercised, the proceeds on
sales of the underlying security for a written call option, the purchase cost of the security for a written put option, or the cost of the
security for a purchased put or call option is adjusted by the amount of premium received or paid.
The risk in writing a call option is that the Funds give up the opportunity for profit if the market price of the security increases and the
option is exercised. The risk in writing a put option is that the Funds may incur a loss if the market price of the security decreases and the
option is exercised. The risk in buying an option is that the Funds pay a premium whether or not the option is exercised. Risks may also
arise from an illiquid secondary market, or from the inability of counterparties to meet the terms of the contract.
C. Futures and Foreign Currency Exchange Contracts
A futures contract is an agreement between two parties to buy and sell a specific amount of a commodity, security or financial instrument
including an index of stocks at a set price on a future date. The Funds "sell" futures contracts as a hedge against declines in the value of
portfolio securities. The Funds may enter into futures contracts to manage the risk of changes in interest rates, equity prices, currency
exchange rates or in anticipation of future purchases and sales of portfolio securities.
Upon entering into a futures contract, each Fund is required to deposit with a broker an