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

TAXES AND DIVIDENDSEach Portfolio is qualified or intends to qualify as a regulated investment company underSubchapter M of the Internal Revenue Code. In order to avoid taxation of capital gains under SubchapterM of the Code, each Portfolio, except the Money Market Portfolio, will distribute net capital gainsannually. Net capital gains from the sale of investments will be calculated by subtracting any unusedcapital loss carryforward from net realized gain for the year, as prescribed by the Internal Revenue Code.To qualify as a regulated investment company, at the close of each quarter of the Portfolio’s taxableyear, (i) at least 50% of the value of its total assets must be represented by cash and cash items, U.S.Government securities, securities of other RICs and securities of other issuers, with such securities ofother issuers limited, in respect to any one issuer, to an amount that does not exceed 5% of the value ofthe Portfolio’s assets and that does not represent more than 10% of the outstanding voting securities ofsuch issuer; and (ii) no more than 25% of the value of a Portfolio’s total assets may be invested in thesecurities of any one issuer (other than U.S. Government securities and securities of other regulatedinvestment companies), or in two or more issuers which the Portfolio controls and which are engaged inthe same or similar trades or businesses.A regulated investment company must derive at least 90% of its gross income from dividends,interest, certain payments with respect to securities loans, gains from the sale or other disposition ofstock, securities or foreign currencies derived from its business of investing in such stock, securities orcurrencies. Under certain circumstances, a Portfolio may be required to sell portfolio holdings to meet thisrequirement.If for any year a Portfolio does not qualify as a regulated investment company, all of its taxableincome (including its net taxable gain) will be subject to tax at regular corporate rates without anydeduction for distributions to shareholders.No distribution of realized capital gains will be made until any capital loss carryforward has beenexhausted or expired. At the end of their last fiscal years, the following Portfolios had unused capital losscarryforwards. Amounts are in thousands.Portfolio Carryforward ExpirationGrowth Stock $ 19,884 2016Focused Appreciation 3,503 2016Large Cap Core 94,178 2011-2016Domestic Equity 114,488 2016Equity Income 2,147 2016Small Cap Growth 89,244 2016International Growth 22,220 2016Select Bond 7,116 2014High Yield Bond 46,872 2009-2016Balanced 83,295 2016Asset Allocation 19,182 2016The Index 500 Stock, Mid Cap Growth Stock, Index 400 Stock, Mid Cap Value, Small CapValue, International Equity, and Money Market Portfolios had no unused capital loss carryforwards.B-64