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 are valued in accordance with guidelines established by the
Board of Directors. Until July 9, 1999, 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 were
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 was
available, such Corporate Loan was valued on the basis of the mean of the last available bid and asked prices in
the market. As of July 12, 1999, pursuant to the approval of the Board of Directors, the Corporate Loans are
valued at the mean between the last available bid and asked prices from one or more brokers or dealers as
obtained from Loan Pricing Corporation. For Corporate Loans for which an active secondary market does not
exist to a reliable degree in the opinion of the Investmen