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

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Effective April 30, 2008, the Fund filed Articles of Amendment with the State of Maryland tochange the name of several of its Portfolios, as follows: the name of the Franklin Templeton InternationalEquity Portfolio was changed to the International Equity Portfolio, the name of the T. Rowe Price SmallCap Value Portfolio was changed to the Small Cap Value Portfolio, the name of the Capital GuardianDomestic Equity Portfolio was changed to the Domestic Equity Portfolio, the name of theAllianceBernstein Mid Cap Value Portfolio was changed to the Mid Cap Value Portfolio, the name of theJanus Capital Appreciation Portfolio was changed to the Focused Appreciation Portfolio and the name ofthe T. Rowe Price Equity Income Portfolio was changed to the Equity Income Portfolio.Each Portfolio is a diversified series of the Fund, except for the Index 400 Stock Portfolio and theIndex 500 Stock Portfolio, which are non-diversified. The Fund is an open-end management investmentcompany.PURCHASE, REDEMPTION AND PRICING <strong>OF</strong> SHARESShares of each Portfolio are offered and redeemed at their net asset value as next determinedfollowing receipt of a purchase order or tender for redemption without the addition of any sellingcommission or “sales load” or any redemption charge. The redemption price may be more or less than theshareholder’s cost.The net asset value of each share of each Portfolio is the net asset value of the entire Portfoliodivided by the number of shares of the Portfolio outstanding. The net asset value of an entire Portfolio isdetermined by computing the value of all assets of the Portfolio and deducting all liabilities, includingreserves and accrued liabilities of the Portfolio. Portfolio securities for which market quotations arereadily available are valued at current market value.Equity securities for which market quotations are readily available are valued at the last sale orofficial closing price as reported by an independent pricing service on the primary market or exchange onwhich they are traded. In the event there were no sales during the day or closing prices are not available,securities are valued at the last quoted bid price. Futures contracts are generally valued at the closingsettlement price on the commodities exchange; unlisted equity securities are generally valued at the lastsale price or closing bid price if no sale has occurred. Derivatives are valued at prices provided by pricingservices or pursuant to fair valuation procedures which may include the use of broker quotations orvaluation models, including those used by the Adviser or Sub-Adviser.Debt securities with maturities generally exceeding one year are valued on the basis of valuationsfurnished by a pricing service, which utilizes electronic data processing techniques to report valuationsfor normal institutional size trading units of debt securities, without regard to exchange or over-thecounterprices, subject to review by the Adviser and Sub-Adviser. Fair valuation procedures may be usedwhen no approved pricing service valuation is available, or when the valuation is questioned and the fairvaluation is significantly different or impacts a Portfolio’s net asset value.Money market instruments and debt securities with maturities exceeding sixty days but generallynot exceeding one year are valued by marking to market, except for the Money Market Portfolio. Markingto market is based on an average (provided by a communication network) of the most recent bid prices oryields. The marking to market method takes into account unrealized appreciation or depreciation due tochanges in interest rates or other factors which would influence the current fair values of such securities.Securities with remaining maturities of sixty days or less, and all debt securities of the MoneyMarket Portfolio, are valued on an amortized cost basis or, if the current market value differs substantiallyfrom the amortized cost, by marking to market. Under the amortized cost method of valuation, thesecurity will initially be valued at the cost on the date of purchase (or, in the case of securities purchasedwith more than 60 days remaining to maturity the market value on the 61st day prior to maturity); andB-62
thereafter the Portfolio will assume a constant proportionate amortization in value until maturity of anydiscount or premium.The value of a foreign security held by the International Growth Portfolio and the InternationalEquity Portfolio is determined in its national currency as of the close of trading on the foreign exchangeon which it is traded, or as of the close of trading on the New York Stock Exchange (typically, 4:00 p.m.,Eastern time), if that is earlier, and that value is then converted into its U.S. dollar equivalent at foreignexchange rates in effect at the close of the New York Stock Exchange. Occasionally, events which affectthe values of such securities and such exchange rates may occur between the times at which they aredetermined and the close of the New York Stock Exchange, and will therefore not be reflected in thecomputation of the Portfolio’s net asset value. If events materially affecting the value of such securitiesoccur during such period, then these securities will be valued at fair value in good faith as determined bythe Adviser in accordance with procedures approved by the Directors of the Fund. Trading in securitieson European and Far Eastern securities exchanges and over-the-counter markets is normally completedwell before the close of business in New York on each day on which the New York Stock Exchange isopen. Trading in European or Far Eastern securities generally, or in a particular country or countries, maynot take place on every New York business day. Furthermore, trading takes place in various foreignmarkets on days which are not business days in New York and on which the Fund’s net asset value is notcalculated. The International Growth Portfolio and the International Equity Portfolio calculate net assetvalue per share, and therefore effect sales and redemptions of their shares, as of the close of the NewYork Stock Exchange once on each day on which that Exchange is open. Such calculation does not takeplace contemporaneously with the determination of the prices of many of the portfolio securities used insuch calculation. If events occur which materially affect the value of these foreign securities, they will bevalued at fair market value in good faith as determined by the Adviser in accordance with proceduresapproved by the Directors of the Fund. In addition, if on any business day a change in the value of theequity markets exceeds a certain threshold, then each foreign security held by a Portfolio will be valued atits fair value by using a value determined by an independent pricing agent rather than using the lastclosing price of such foreign security on its principal overseas market. This description of issues andpractices for the International Growth and International Equity Portfolios will also apply for the otherPortfolios which are authorized to invest in foreign securities to the extent that those Portfolios invest insecurities for which the principal trading activity takes place in foreign markets.All other assets, including any securities for which market quotations are not readily available, willbe valued at their fair value as determined in good faith in accordance with procedures adopted by theDirectors of the Fund. The net asset value is determined as of the close of trading on the New York StockExchange on each day during which the Exchange is open for trading.The Money Market Portfolio will use its best efforts to maintain a constant net asset value per shareof $1.00 (computed to an accuracy of $.005); however, the net asset value is subject to fluctuation basedupon changes in the value of the Portfolio’s securities. Accordingly, if net losses on the Portfolio’ssecurities for a given period exceed income after expenses, the net asset value per share of Money MarketPortfolio capital stock will decline. The Board of Directors of the Fund will take such action as itconsiders appropriate to maintain the stability of the net asset value per share. For example, the Directorsmay reduce or suspend the payment of dividends if the net asset value per share should decline below$.995 and the Directors may supplement such dividends with other distributions if the net asset value pershare should rise above $1.005.Payment for the shares redeemed must be made within seven days after the evidence ofownership of such shares is tendered to the Fund; however, the right to redeem Fund shares may besuspended, or payment of the redemption value postponed, during any period in which the New YorkStock Exchange is closed or trading thereon is restricted, or any period during which an emergency exists,or as otherwise permitted by the 1940 Act.B-63
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APPENDIX F - Proxy Voting Policies
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stocks that make up that index. Str
Page 11 and 12: Interest rate swaps do not involve
Page 13 and 14: the Adviser or Sub-Adviser will not
Page 17 and 18: Forward Contracts. The Portfolios m
Page 19 and 20: principal amount as the call writte
Page 21 and 22: Options on Foreign Currencies. The
Page 23 and 24: securities. The issuers of the unde
Page 25 and 26: the former pools. However, timely p
Page 27 and 28: CMO residuals are generally purchas
Page 29: utilize the underlying assets may r
Page 32 and 33: include range floaters which are a
Page 34 and 35: par unless the price of the underly
Page 36 and 37: to changes in interest rates genera
Page 38 and 39: corresponding floaters. The underly
Page 40 and 41: A Portfolio will not enter into suc
Page 42 and 43: egulations. The presence of an issu
Page 44 and 45: Portfolio TurnoverPortfolio turnove
Page 46 and 47: The ability of the Portfolio to ach
Page 48 and 49: Advisors, LLC, in accordance with t
Page 50 and 51: OWNERSHIP OF SHARES OF THE FUNDAll
Page 52 and 53: on the next $50 million, 0.50% on t
Page 54 and 55: Independent Registered Public Accou
Page 56 and 57: Name of Portfolio 2008 2007 2006Int
Page 58 and 59: Broker High Yield Bond BalancedAsse
Page 60 and 61: and cost of trade execution of Port
Page 64 and 65: TAXES AND DIVIDENDSEach Portfolio i
Page 66 and 67: APPENDIX A - Credit RatingsDescript
Page 68 and 69: F2Good credit quality. A satisfacto
Page 70 and 71: . Moody’s Commercial Paper (short
Page 72 and 73: Plus (+) or minus (-)The ratings fr
Page 74 and 75: APPENDIX B - Directors and Officers
Page 76 and 77: Name, Address, andYear of BirthDavi
Page 78 and 79: APPENDIX C - Ownership of Shares of
Page 80 and 81: SMALL CAP VALUE PORTFOLIOGeneral Ac
Page 82 and 83: APPENDIX D - Portfolio ManagersOthe
Page 84 and 85: PortfolioManager(s)FundRegisteredIn
Page 86 and 87: Compensation of Portfolio ManagersM
Page 88 and 89: management firms. Performance is pr
Page 90 and 91: Portfolio managers are eligible for
Page 92 and 93: PortfolioPortfolio Manager(s)Dollar
Page 94 and 95: On August 25, 2005, the Court enter
Page 96 and 97: MSA’s Equity Trading Department s
Page 98 and 99: ERISA ClientsIn the case of client
Page 100 and 101: Shareholder Ability to Call Special
Page 102 and 103: • Exercise price• Participation
Page 104 and 105: Amend Quorum RequirementsVote propo
Page 106 and 107: Vote proposals to increase blank ch
Page 108 and 109: employees of Investment Manager and
Page 110 and 111: will not support the position of a
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company specifies the voting, divid
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egarding whether Investment Manager
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3. The issuer is an entity particip
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manager(s) are responsible for maki
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Global Corporate Governance: Invest
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13. The Proxy Group will review the
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determined by those investment comm
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T. Rowe Price has adopted these Pro
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shareholders and the effect on shar
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portfolio company could have influe
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The Proxy Voting Service will refer
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that substantially differs from dom
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15. Janus will generally vote in fa
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46. For shareholder proposals outsi
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2. Staggered BoardIf a company has
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proposed for a legitimate business
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APPENDIX G - Portfolio Holdings Dis
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ICP Securities LLCIntermonte Securi
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B-1 STATEMENT OF ADDITIONAL INFORMATION Dated May 1 ...

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