NOTES TO FINANCIAL STATEMENTS
FOREIGN CURRENCY TRANSLATION: The books and records of Strategic Portfolio I are maintained in
U.S. dollars. Foreign currency amounts are translated into U.S. dollars on the following basis:
(I) market value of investment securities, assets and liabilities at the current rate of exchange; and
(II) purchases and sales of investment securities, income and expenses at the relevant rates of exchange prevailing
on the respective dates of such transactions.
The Portfolio isolates that portion of gains and losses on investment securities which is due to changes in the
foreign exchange rates from that which is due to changes in market prices of such securities.
The Portfolio reports certain foreign currency related transactions as components of realized and unrealized gains
for financial reporting purposes, whereas such components are treated as ordinary income for federal income tax
FORWARD FOREIGN CURRENCY CONTRACTS: The Strategic Portfolio I enters into forward foreign
currency contracts as a hedge against either specific transactions or portfolio positions. These contracts are
adjusted by the daily exchange rate of the underlying currency and any gains or losses are recorded as unrealized
until the contract settlement date. Such contracts, which protect the value of the Portfolio's investment securities
against a decline in the value of currency, do not eliminate fluctuations in the underlying prices of the securities.
They simply establish an exchange rate at a future date. Also, although such contracts tend to minimize the risk of
loss due to a decline in the value of a hedged currency, at the same time they tend to limit any potential gain that
might be realized should the value of such foreign currency increase. Risks may arise upon entering into these
contracts from the potential inability of counterparties to meet the terms of their contracts and from unanticipated
movements in the value of a foreign currency relative to the U.S. do