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

A Portfolio will not enter into such a transaction for the purpose of investment leverage. Liabilityfor the purchase price - and all the rights and risks of ownership of the securities - accrue to the Portfolioat the time it becomes obligated to purchase such securities, although delivery and payment occur at alater date. Accordingly, if the market price of the security should decline, the effect of the agreementwould be to obligate the Portfolio to purchase the security at a price above the current market price on thedate of delivery and payment. During the time the Portfolio is obligated to purchase such securities it willmaintain in a segregated account U.S. Government securities, high-grade debt obligations, cash or cashequivalents or other liquid assets of an aggregate current value sufficient to make payment for thesecurities. The longer the period between purchase and settlement, the greater the risks and the longer theperiod during which alternative investment options are unavailable to the Portfolio.Eurodollar Certificates of DepositEach of the Portfolios may purchase Eurodollar certificates of deposit issued by foreign branchesof U.S. banks, but consideration will be given to their marketability and possible restrictions on the flowof international currency transactions. Investment in such securities involves considerations which are notordinarily associated with investing in domestic instruments, including currency exchange controlregulations, the possibility of expropriation, seizure, or nationalization of foreign deposits, less liquidityand increased volatility in foreign securities markets, and the impact of political, social or diplomaticdevelopments or the adoption of other foreign government restrictions that might adversely affect thepayment of principal and interest. If the Portfolio were to invoke legal processes, it might encountergreater difficulties abroad than in the United States.Dollar Roll TransactionsA mortgage dollar roll is similar to a reverse repurchase agreement in certain respects. Dollar rolltransactions consist of the sale by a Portfolio to a bank or broker/dealer (the “counterparty”) of mortgagebackedsecurities together with a commitment to purchase from the counterparty similar, but not identical,securities at a future date, at a similar price. Dollar roll transactions may also consist solely of acommitment to purchase mortgage-backed securities from the counterparty. The counterparty receives allprincipal and interest payments, including prepayments, made on the security while it is the holder. APortfolio will receive compensation as consideration for entering into the commitment to purchase. Thecompensation can be in the form of a fee or a reduction in the repurchase price of the security. Typically,a Portfolio will receive a reduction in the repurchase price of the security and a cash settlement made atthe renewal without physical delivery of securities. Dollar rolls may be renewed over a period of severalmonths with a different purchase and repurchase price fixed and a cash settlement made at each renewalwithout physical delivery of securities. Moreover, the transaction may be preceded by a firm commitmentagreement pursuant to which a Portfolio agrees to buy a security on a future date.A Portfolio will segregate or “earmark” cash, U.S. Government securities or other liquid assets inan amount sufficient to meet its purchase obligations under the transactions. As with reverse repurchaseagreements, to the extent that positions in dollar roll agreements are not covered by segregated or“earmarked” liquid assets at least equal to the amount of any forward purchase commitment, suchtransactions would be subject to the Portfolio’s restrictions on borrowingsA dollar roll involves costs to a Portfolio. For example, while a Portfolio receives compensationas consideration for agreeing to repurchase the security, a Portfolio forgoes the right to receive allprincipal and interest payments while the counterparty holds the security. These payments to thecounterparty may exceed the compensation received by a Portfolio, thereby effectively charging aPortfolio interest on its borrowings. Further, although a Portfolio can estimate the amount of expectedprincipal prepayment over the term of the dollar roll, a variation in the actual amount of prepayment couldincrease or decrease the cost of a Portfolio’s borrowing.The entry into dollar rolls involves potential risks of loss that are different from those related tothe securities underlying the transactions. For example, if the counterparty becomes insolvent, aPortfolio’s right to purchase from the counterparty might be restricted. Additionally, the value of suchB-40