|
<br /> .
<br /> , .
<br /> . Investment IWks.. The Fund is subject to interest rat.. risk, which is the potential fot a decline in bond
<br /> prices due to .rising inrerest rates. In general, bond;prices vary. inversely with. interest rates- When interest
<br /> rares rise, bond prices generally fall. Conversely,' when interest rates. fall, bond prices generally rise. Interest
<br /> - rate risk applies to U.S, Government securities 'asi well as other bonds- u.s. Government seauities are
<br /> gua;anteed only as to the payment of interest and principal. The current market prices for such securities are
<br /> - not anteed and will f1u~te. ,: ._.~. ......." " . ..- .' .
<br /> ',; ;'=~~imd inv~ 'a~ s;gnifica:.t~~~on"'Of~~l~ 1n"~o~g::re;ar:~~C:riti"': and;'~ a .~t,'~
<br /> ~
<br /> subject to. -prepayment. risk. Prepayinenr risk resulJs 'because; as interest rates fall, homeowners ate. more
<br /> - likely ro refinance their home mortgages. When ho~e mortgages are refinanced; the principal on mortgage-
<br /> - related securities held by the Fund' is "prepaid"',drlienhan expected. The Fund must.then reinvest the
<br /> un~ncicipatcd principal payments, JUSt at 0 time when interest rates on De'\'.' morrg:1ge invesonents are f.:zlIing.
<br /> - Prepa}'T':',ent ri:k h:JS:wo,imP.ortant eff~ctS??~und:, <"."'. .., H '.""
<br /> - . When' mrerest rateS fall and addinonal mortgage. prepayments 'must be remvesred at lower mreresr
<br /> rates., the income of the Fund will be redu&d.
<br /> ,j
<br /> . When interest rates fall, prices on mortgage-backed securities may not rise as much as comparable
<br /> I ,,:. .. "." '.Treasury bonds because bond marker'invesinrs may anticipate. an increase in mortgage prepayments
<br /> '. ':lnd' likel'd !in .. ,".'1'-1_:""" ,..... .... '." ..' .....,. -..
<br /> . . a y. ec e-mmcome..~._.4' _' 'n'- '. ._.1.~ ~r., q-. { , ,', .',1_..._.
<br /> . d~
<br /> ;; '. ,,-,,~ ~;. 'r~ ._:" ,', _ -,'-'"", "'~;.II!o r ~,,-"", " I~ ,'.' ", .' .... .: :"_--
<br /> The Fund's invesonents in morrgage-~elate(fs~tiesalsosubjecrthe Fund to e,crensionrisk, Extension
<br /> I risk is the possibility that rising interest rates may 'C;~se prepayments ro occur ar i slower than expected rate.
<br /> This particular risk may effectively change asecUH!r whiclrwas considered'shorr-or'iritermediate-cerm at
<br /> the rime of purchase into a .long-term security. u,ng-cerm securities. generally fluctUate more widely in
<br /> response to. changes. in interest: rates than short<~ intermediare-cerm securities.: .' .' ' . .-. ,.
<br /> I . The Fund's invesnnents in mortgage-relaced'bnties inclua~ d~ri~~tive morrgage~curiti';' -~i:I:i ;..
<br /> Os and 'stripped mortgage-baclced securitieS ~ch, as discussedabove,.may.involve risks in addition ro
<br /> those:found;in other mortgage-related:securities.:The markerexperience of1994 has shown that certain
<br /> I derivative mortgage securities'may. be highly sensi~e ro changes in interesr and prepayment rares and; as a
<br /> result, the prices of such securities may be highly; ""larile. lncaddition, the market experience of 1994- has
<br /> shown that during periods of rising interest rates,'d1e market for certain derivative mortgage securities may
<br /> I become more unstable and such securities may beCOme mor~ diffiCult to'sell is marke, makers' either choose
<br /> not ro repurc!l3Se sUch securities or offer prices., liaJd on current marker conditions, which are unacceptable
<br /> r6 the Fund. As discussed above, the invesnnenntdllliques used by the Fund also pose certain risks. .
<br /> . 1 . -
<br /> I ' MANAGEMENT
<br /> Board of Directors '1
<br /> . , !'1
<br /> I The Company's Board of Directors has '''die primary responsibility for' overseeing the overall
<br /> management of the Company' and electing its o~ers.
<br /> . t
<br /> Investment Adviser:"= ," ,.'1 ..
<br /> I Piper Capital Management Incorporated (th~ "Adviser'') has been rerained under an Investment
<br /> Advisory and Management Agreement with the Company to acr as the Fund's invesnnenr adviser subject to
<br /> the authoriry of the Board of Direcrors; ..' '~~ ,";. . ;.:,
<br /> I '>,,'In addition co acting as investment adviser for:rhe other series of the Company, the Adviser.aIso serves as
<br /> investment adviser to a nutnber of other.open'eliil and closed-end.invesrment companies. and ro.various
<br /> other' concerns, including pension..and profit' sliaring funds, corporate funds, and individuals. As of
<br /> I
<br /> I I
<br /> '11
<br /> j
<br /> I .
<br /> I
<br />
|