NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the Fund in the preparation of its
SECURITY VALUATION: The Fund values its fixed-income securities by using market quotations, prices
provided by market makers or estimates of market values obtained from yield data relating to instruments with
similar characteristics in accordance with procedures established by the Board of Directors of the Fund. The
relative illiquidity of some securities in the Fund's portfolio may adversely affect the ability of the Fund to
accurately value such securities. Any securities or other assets for which such current market quotations are not
readily available are valued at fair value as determined in good faith under procedures established by and under
the general supervision and responsibility of the Fund's Board of Directors.
Debt securities having a remaining maturity of sixty days or less are valued at cost adjusted for amortization of
premiums and accretion of discounts.
SECURITY TRANSACTIONS AND INVESTMENT INCOME: Security transactions are recorded on the
trade date. Realized gains and losses on sales of securities are calculated on the identified cost basis. Interest
income is recorded on the accrual basis. The Fund accretes original issue discount on securities using the effective
FEDERAL INCOME TAXES: It is the Fund's intention to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute sufficient net income and capital gains, if any, to
shareholders to qualify as a regulated investment company. For this reason, no Federal income tax provision is
required. For Federal income tax purposes, the Fund had a capital loss carryforward of $8,183,842 at
December 31, 1999, of which $3,401,429 expires in 2002 and $4,782,413 expires in 2003, if not offset by
subsequent capital gains.
DIVIDENDS AND DISTRIBUTIONS: The Fund will declare and pay dividends