Note 3 — Summary
of Significant Accounting Policies – (continued)
quoted
prices for identical or similar assets or liabilities in markets that are not
considered to be active, inputs
other than quoted prices that are observable for the asset or liability (such as
exchange rates, financing
terms, interest rates, yield curves, volatilities, prepayment speeds, loss
severities, credit risks and default
rates) or other market-corroborated inputs; and
• Level 3 –
Unobservable inputs for the assets or liabilities, including the Committee’s
assumptions used in determining the fair
value of investments.
Investment
Transactions and Income Recognition
Investment
transactions are accounted for on the trade date for financial reporting
purposes. Dividend income
and capital gain distributions, if any, are recognized on the ex-dividend date,
or when the information
becomes available, net of any foreign taxes withheld at source, if any. Non-cash
dividends received
in the form of stock, if any, are recorded as dividend income at fair value.
Realized gains and losses from the
sale or disposition of investments are determined using the identified cost
method.
The
Trust declares and distributes dividends from net investment income, if any, to
its holders of Units (“Unitholders”), monthly.
Capital gain distributions, if any, are generally declared and paid annually.
Additional
distributions may be paid by the Trust to avoid imposition of federal income and
excise tax on any remaining
undistributed net investment income and capital gains. The amount and character
of income and gains
to be distributed are determined in accordance with federal tax regulations
which may differ from net investment income
and realized gains recognized for U.S. GAAP purposes.
The
Trustee follows the accounting practice known as “Equalization” by which a
portion of the proceeds from
sales and costs of reacquiring the Trust's Units, equivalent on a per Unit basis
to the amount of distributable
net investment income on the date of the transaction, is credited or charged to
undistributed net
investment income. As a result, undistributed net investment income per Unit is
unaffected by sales or reacquisitions
of the Trust's Units. Amounts related to Equalization can be found on the
Statements of Changes in Net
Assets.
For
U.S. federal income tax purposes, the Trust has qualified as a “regulated
investment company” under Subchapter
M of the Internal Revenue Code of 1986, as amended (a “RIC”), and intends to
continue to qualify
as a RIC. As a RIC, the Trust will generally not be subject to U.S. federal
income tax for any taxable year
on income, including net capital gains, that it distributes to its Unitholders,
provided that it distributes on a
timely basis at least 90% of its “investment company taxable income” determined
prior to the deduction for
dividends paid by the Trust (generally, its taxable income other than net
capital gain) for such taxable year.
In addition, provided that the Trust distributes substantially all of its
ordinary income and capital gains
