B-1 STATEMENT OF ADDITIONAL INFORMATION Dated May 1 ...

Convertible SecuritiesEach of the Portfolios may invest convertible securities. A convertible security is a bond,debenture, note, preferred stock or other security that may be converted into or exchanged for a prescribedamount of common stock of the same or a different issuer within a particular time period at a specifiedprice or formula. A convertible security entitles the holder to receive the interest paid or accrued on debtor the dividend paid on preferred stock until the convertible security matures or is redeemed, converted orexchanged. Before conversion or exchange, such securities ordinarily provide a stream of income withgenerally higher yields than common stocks of the same or similar issuers, but lower than the yield onnon-convertible debt. Of course, there can be no assurance of current income because issuers ofconvertible securities may default on their obligations. In addition, there can be no assurance of capitalappreciation because the value of the underlying common stock will fluctuate. Because of the conversionfeature, the managers consider some convertible securities to be equity equivalents.The price of a convertible security will normally fluctuate in some proportion to changes in theprice of the underlying asset. A convertible security is subject to risks relating to the activities of theissuer and/or general market and economic conditions. The stream of income typically paid on aconvertible security may tend to cushion the security against declines in the price of the underlying asset.However, the stream of income causes fluctuations based upon changes in interest rates and the creditquality of the issuer. In general, the value of a convertible security is a function of (1) its yield incomparison with yields of other securities of comparable maturity and quality that do not have aconversion privilege and (2) its worth, at market value, if converted or exchanged into the underlyingcommon stock. The price of a convertible security often reflects such variations in the price of theunderlying common stock in a way that a non-convertible security does not. At any given time,investment value generally depends upon such factors as the general level of interest rates, the yield ofsimilar nonconvertible securities, the financial strength of the issuer and the seniority of the security in theissuer's capital structure.A convertible security may be subject to redemption at the option of the issuer at a predeterminedprice. If a convertible security held by a Portfolio is called for redemption, the Portfolio would berequired to permit the issuer to redeem the security and convert it to underlying common stock or to cash,or would sell the convertible security to a third party, which may have an adverse effect on the Portfolio.A convertible security may feature a put option that permits the holder of the convertible security to sellthat security back to the issuer at a predetermined price. A Portfolio generally invests in convertiblesecurities for their favorable price characteristics and total return potential and normally would notexercise an option to convert unless the security is called or conversion is forced.Unlike a convertible security that is a single security, a synthetic convertible security iscomprised of two distinct securities that together resemble convertible securities in certain respects.Synthetic convertible securities are created by combining non-convertible bonds or preferred stocks withwarrants or stock call options. The options that will form elements of synthetic convertible securities willbe listed on a securities exchange or NASDAQ. The two components of a synthetic convertible security,which will be issued with respect to the same entity generally are not offered as a unit, and may bepurchased and sold by a Portfolio at different times. Synthetic convertible securities differ fromconvertible securities in certain respects. Each component of a synthetic convertible security has aseparate market value and responds differently to market fluctuations. Investing in a synthetic convertiblesecurity involves the risk normally found in holding the securities comprising the synthetic convertiblesecurity.Reverse Convertible NotesThe Portfolios may invest in reverse convertible notes. A reverse convertible is a short-tointermediateterm structured product, generally issued by a financial institution, in which performance isbased on that of an underlying security, commodity or index. Generally, at maturity the note matures atB-33