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

e incurred, particularly when a Portfolio changes investments from one country to another or whenproceeds of the sale of shares in U.S. dollars are used for purchase of securities in foreign countries. Also,some countries may adopt policies which would prevent the Portfolios from transferring cash out of thecountry or withhold portions of interest and dividends at the source. There is the possibility of cessationof trading on national exchanges, expropriation, nationalization or confiscatory taxation, withholding andother foreign taxes on income or other amounts, foreign exchange controls (which may includesuspension of the ability to transfer currency from a given country), default in foreign governmentsecurities, political or social instability, or diplomatic developments which could affect investments insecurities of issuers in foreign nations.Each Portfolio may be affected either unfavorably or favorably by fluctuations in the relativerates of exchange between the currencies of different nations, by exchange control regulations and byindigenous economic and political developments. Further, certain currencies may not be internationallytraded. Some countries in which the Portfolios may invest may also have fixed or managed currencies thatare not free-floating against the U.S. dollar.Certain currencies may experience a steady devaluation relative to the U.S. dollar. Anydevaluations in the currencies in which a Portfolio’s securities are denominated may have a detrimentalimpact on that Portfolio. A Portfolio’s manager endeavors to follow a flexible policy seeking to avoidunfavorable consequences and to take advantage of favorable developments that may impact securitiesdenominated in foreign currencies. The exercise of this flexible policy may include decisions to buysecurities with substantial risk characteristics and other decisions such as changing the emphasis oninvestments from one nation to another and from one type of security to another. Some of these decisionsmay later prove profitable and others may not. No assurance can be given that profits, if any, will exceedlosses.Foreign interest rates To the extent each Portfolio invests in debt securities denominated in aparticular foreign currency, changes in interest rates in the domicile country of that currency will affectthe value of the assets so invested and, consequently, the Portfolio’s share price. Rising interest rates in aforeign country, which often occur during times of inflation or a growing economy, are likely to cause theface value of a debt security denominated in that country’s currency to decrease, having a negative effecton the value of the Portfolio’s shares. Of course, interest rates have increased and decreased, sometimesvery dramatically, in the past. These changes are likely to occur again in the future at unpredictable times.Fluctuations in foreign interest rates will not necessarily correspond with fluctuations in U.S. interestrates.Initial Public OfferingsEach Portfolio may participate in initial public offerings. A Portfolio that purchases securitiesissued in an IPO is subject to the risk that the value of the securities may rise or fall more rapidly thanother investments. Prior to an IPO, there is generally no public market for an issuer’s common stock.There can be no assurance that an active trading market will develop or be sustained following the IPO,therefore, the market price for the securities may be subject to significant fluctuations and a Portfolio maybe affected by such fluctuations. In addition, securities issued in an IPO are often issued by a companythat may be in the early stages of development with a history of little or no revenues and such companymay operate at a loss following the offering. A Portfolio’s ability to obtain shares of an IPO security maybe substantially limited in the event of high demand for the securities and there is no guarantee that thePortfolio will receive an allocation of shares. For IPO offerings in which the Adviser or Sub-Adviser of aPortfolio is offered a relatively small number of shares, a disproportionate number of such shares may beallocated to that Portfolio, in the Adviser’s or Sub-Adviser’s discretion. To the extent a Portfolio investsin IPOs, a significant portion of its returns may be attributable to its investments in IPOs, which have amagnified impact on Portfolios with small asset bases. There is no guarantee that as those Portfolios’assets grow they will continue to experience substantially similar performance by investing in IPOs.B-43