In
the event prices or quotations are not readily available or that the application
of these valuation methods results in a price for an investment that is deemed
to be not representative of the fair value of such investment, fair value will
be determined in good faith by the Committee, in accordance with the valuation
policy and procedures approved by the Board.
Fair
value pricing could result in a difference between the prices used to calculate
the Fund's NAV and the prices used by the Fund's underlying benchmark.
Various
inputs are used in determining the value of the Funds' investments.
The
Funds value their assets and liabilities at fair value using a fair value
hierarchy consisting of three broad levels that prioritize the inputs to
valuation techniques giving the highest priority to readily available unadjusted
quoted prices in active markets for identical assets or liabilities (Level 1
measurements) and the lowest priority to unobservable inputs (Level 3
measurements) when market prices are not readily available or reliable. The
categorization of a value determined for an investment within the hierarchy is
based upon the pricing transparency of the investment and is not necessarily an
indication of the risk associated with investing in it.
The
three levels of the fair value hierarchy are as follows:
• Level
1 – Unadjusted quoted prices in active markets for an identical asset or
liability;
•
Level 2 – Inputs other than quoted prices included within Level 1 that are
observable for the asset or liability either directly or indirectly, including
quoted prices for similar assets or liabilities in active markets, 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 asset or liability, including the
Committee’s assumptions used in determining the fair value of investments.
The
value of each Fund’s investments, according to the fair value hierarchy as of
December 31, 2022, is disclosed in each Fund’s respective Schedule of
Investments.
Investment
Transactions and Income Recognition
Investment
transactions are accounted for on the trade date for financial reporting
purposes. Realized gains and losses from the sale and disposition of investments
are determined using the identified cost method.
Dividend
income and capital gain distributions, if any, are recognized on the ex-dividend
date, net of any foreign taxes withheld at source, if any. Interest income is
recorded on an accrual basis. All premiums and discounts are amortized/accreted
for financial reporting purposes. Paydown gains and losses are recorded as an
adjustment to interest income. Non-cash dividends, if any, received in the form
of stock are recorded as dividend income at fair value.
Expenses
Certain
expenses, which are directly identifiable to a specific Fund, are applied to
that Fund within the Trust. Other expenses which cannot be attributed to a
specific Fund are allocated in such a manner as deemed equitable, taking into
consideration the nature and type of expense and the relative net assets of the
Funds within the Trust. Class specific expenses are borne by each class.
Equalization
The
Funds follow the accounting practice known as “Equalization” by which a portion
of the proceeds from sales and costs of reacquiring Fund shares, equivalent on a
per share 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 share is unaffected
by sales or reacquisition of Fund shares. Amounts related to Equalization can be
found on the Statements of Changes in Net Assets.
