NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
to determine the realized gain or loss. Realized gains and losses on purchased options are included in realized
gains and losses on investment securities, except purchased options on foreign currency which are included in
realized gains and losses on foreign currency transactions. If a put option written by the Fund is exercised, the
premium reduces the cost basis of the securities purchased by the Fund. The Fund, as writer of an option, has no
control over whether the underlying securities may be sold (call) or purchased (put) and as a result bears the
market risk of an unfavorable change in the price of the security underlying the written option.
Exchange traded options are valued at the last sale price, or if no sales are reported, the last bid price for
purchased options and the last ask price for written options. Options traded over-the-counter are valued using
prices supplied by the dealers.
The Fund entered into no such transactions during the six months March 31, 2001.
The Fund may enter into financial futures contracts for the delayed sale or delivery of securities or contracts
based on financial indices at a fixed price on a future date. Pursuant to the margin requirements, the Fund
deposits either cash or securities in an amount equal to a certain percentage of the contract amount. Subsequent
payments are made or received by the Fund each day, depending on the daily fluctuations in the value of the
underlying security, and are recorded for financial statement purposes as unrealized gains or losses by the Fund.
There are several risks in connection with the use of futures contracts as a hedging device. The change in value of
futures contracts primarily corresponds with the value of their underlying instruments or indices, which may not
correlate with changes in the value of hedged investments. Buying futures tends to increase the Fund's exposure
to the underlying instrument, while selling futures tends to decrease the F