GOVERNMENT FUNDInvestment Objective: <strong>The</strong> Fund seeks to achieve a significant level of current income which isconsistent with security and liquidity of principal.Fees and Expenses of the Fund: This table describes the fees and expenses that you may pay if youbuy and hold shares of the Fund. Investments in the Fund can only be made through a variableannuity contract or life insurance policy offered by a participating insurance company. This tabledoes not reflect the fees and expenses that are or may be imposed by a variable annuity contract orlife insurance policy for which the Fund is an investment option. For information regarding thosefees and expenses, please refer to the applicable variable annuity contract or life insurance policyprospectus. If those fees and expenses were included, the overall fees and expenses shown in thetable would be higher.Shareholder Fees (fees paid directly from your investment)Maximum sales charge (load) imposed on purchasesN/A(as a percentage of offering price)Maximum deferred sales charge (load) (as a percentage of the lower ofN/Apurchase price or redemption price)Annual Fund Operating Expenses (expenses that you pay each year as apercentage of the value of your investment)Management Fees 0.75%Distribution and Service (12b-1) FeesNoneOther Expenses 0.16%Total Annual Fund Operating Expenses 0.91%Example<strong>The</strong> Example is intended to help you compare the cost of investing in the Fund with the cost ofinvesting in other mutual funds. <strong>The</strong> Example assumes that you invest $10,000 in the Fund for thetime periods indicated and then redeem all of your shares at the end of those periods. <strong>The</strong> Examplealso assumes that your investment has a 5% return each year and that the Fund’s operating expensesremain the same. <strong>The</strong> table below does not include the fees or expenses that are or may beimposed by a variable annuity contract or life insurance policy for which the Fund is an investmentoption. If they were included, the expenses shown in the table below would be higher. Althoughyour actual costs may be higher or lower, based on these assumptions your costs would be:1 year 3 years 5 years 10 yearsGovernment Fund $93 $290 $504 $1,12012
Portfolio Turnover: <strong>The</strong> Fund paystransaction costs, such as commissions, whenit buys and sells securities (or “turns over” itsportfolio). A higher portfolio turnover mayindicate higher transaction costs. <strong>The</strong>se costs,which are not reflected in annual fundoperating expenses or in the example, affectthe Fund’s performance. During the mostrecent fiscal year, the Fund’s portfolioturnover rate was 118% of the average value ofits whole portfolio.Principal Investment Strategies: Undernormal circumstances, the Fund invests atleast 80% of its net assets (plus anyborrowings for investment purposes) insecurities issued or guaranteed as to paymentof principal and interest by the U.S.Government, its agencies or instrumentalities(“U.S. Government Securities”).<strong>The</strong> Fund invests in all types of U.S.Government Securities, which may include (a)U.S. Treasury obligations, (b) securities thatare issued or guaranteed by U.S. Governmentagencies or instrumentalities that are backedby the full faith and credit of the U.S.Government, such as mortgage-backedsecurities that are guaranteed by theGovernment National Mortgage Association(“GNMA”), and (c) securities that are issuedor guaranteed by agencies or instrumentalitiesthat are sponsored by Congress but whosesecurities are not guaranteed by the U.S.Government and are backed solely by thecredit of the issuing agency or instrumentalityand the right to borrow from the U.S.Treasury, such as mortgage-backed securitiesissued by the Federal National MortgageAssociation (“Fannie Mae”) and Federal HomeLoan Mortgage Corporation (“Freddie Mac”).<strong>The</strong> Fund may also invest in U.S. Treasuryfutures and options on U.S. Treasury futures tohedge against changes in interest rates.<strong>The</strong> Fund uses a “top down” approach inmaking investment decisions based on itsassessment of interest rates, economic andmarket conditions, and the relative values ofdifferent types of U.S. Government securities.In selecting investments, the Fund considers,13among other factors, maturity, yield, relativevalue and, in the case of mortgage-backedsecurities, coupon and weighted averagematurity. <strong>The</strong> Fund will usually sell aninvestment when there are changes in theinterest rate environment that are adverse tothe investment.Principal Risks: You can lose money byinvesting in the Fund. While the Fund investsin securities that are issued or guaranteed bythe U.S. Government, its agencies orinstrumentalities, your investment in the Fundis not insured or guaranteed by the U.S.Government. Here are the principal risks ofinvesting in the Fund:Interest Rate Risk. In general, when interestrates rise, the market value of a debt securitydeclines, and when interest rates decline, themarket value of a debt security increases. <strong>The</strong>Fund may be subject to a greater risk of risinginterest rates during periods of historically lowinterest rates. Securities with longermaturities are generally more sensitive tointerest rate changes.Prepayment and Extension Risk. <strong>The</strong> Fundis subject to prepayment and extension risksince it invests in mortgage-backed securities.When interest rates decline, borrowers tend torefinance their mortgages. When this occurs,the mortgages that back these securities suffera higher rate of prepayment. This could causea decrease in the Fund’s income and shareprice. Extension risk is the flip side ofprepayment risk. When interest rates rise, theFund’s average maturity may lengthen due to adrop in prepayments. This will generallyincrease both the Fund’s sensitivity to interestrates and its potential for price declines.Credit Risk. This is the risk that an issuer ofbonds will be unable to pay interest orprincipal when due. <strong>The</strong> prices of bonds areaffected by the credit quality of the issuer and,in the case of mortgage-backed securities, thecredit quality of the underlying mortgages.Credit risk applies to securities issued by theU.S. Government and by U.S. Governmentsponsoredenterprises (such as Fannie Mae