Other Investment Strategies and Risks

Information about the Series’ principal investment strategies and risks appears under “Principal Investment Strategies” above. The information below describes other investment strategies that the Series may use and their risks, arranged in alphabetical order. Further descriptions of these investment strategies and practices can be found in the SAI.

One or more of the following risks may apply to the Series indirectly through its investments in other investment companies, including exchange traded funds (ETFs). The greater an investment in a particular asset class by the Series, the greater the impact to the Series of the risks related to the class.

Cash Investments

When the subadvisor believes that market conditions are unfavorable for profitable investing, or is otherwise unable to locate attractive investment opportunities, the Series’ cash or similar investments may increase. In other words, the Series may not always stay fully invested in stocks. When the Series’ investments in cash or similar investments increase, it may not participate in market advances or declines to the same extent that it would if the Series was more fully invested in stocks.

Derivative Investments

The Series may, but need not, enter into various instruments that derive their values from those of specific securities, indexes, currencies or other points of reference for both hedging and non-hedging purposes. Derivatives include, but are not limited to, futures, options, forward contracts, swaps, and structured notes. These derivatives may be used to hedge against the economic impact of adverse changes in the market value of portfolio securities because of changes in securities market prices, interest rates or currencies. The Series engages in derivatives transactions primarily for hedging purposes. The Series may also use derivatives as part of its overall investment technique to gain or lessen exposure to various securities, markets and currencies. The Series may also use derivative transactions for certain nonhedging purposes, such as seeking to enhance returns.

The Series may invest up to an aggregate of 5% of its total assets in exchange-traded or over-the-counter call and put options on securities, securities indexes and foreign currencies.

Immediately after entering into a futures contract for the receipt or delivery of a security, the value of the securities called for by all of the Series’ futures contracts (both for receipt and delivery) will not exceed 10% of its total assets.

As a registered investment company, the Series is subject to the Investment Company Act of 1940, related rules, and related SEC and SEC staff positions. Therefore, with respect to certain derivatives, the Series must set aside (referred to sometimes as “asset segregation”) liquid assets or engage in other SEC or SEC staff approved measures while the derivative contracts are open. For example, with respect to forward commitments and futures contracts that are not contractually required to “cash settle”, the Series must cover its open positions by setting aside liquid assets equal to the contracts’ full notional value. With respect to

forward commitments and futures contracts that are required to “cash settle,” however, the Series is permitted to set aside liquid assets in an amount equal to the Series’ daily mark to market (net) obligations if any (i.e., the Series’ daily liability if any) rather than the notional value.

Derivatives, including those used to manage risk, are themselves subject to risks of the different markets in which they trade and, therefore, may not serve their intended purpose. These investments may not protect the Series from losses, they may decrease overall return, and they could, in unusual circumstances, expose the Series to losses that could be unlimited. The Series’ performance may be worse than if it did not make such investments.

If the prices for derivatives and prices in the cash market do not correlate as expected or if expectations about interest rate, exchange rate or general market movements are incorrect, a Series’ returns may be lower than they would have been if it did not invest in these securities. There is also a risk that the market for reselling derivatives may be limited or nonexistent. A Series could incur unlimited losses if it cannot liquidate its derivatives investments. Decisions about the nature and timing of derivative transactions may result in losses when other investors’ decisions about the same derivatives result in gains. In addition, some derivatives are subject to the risk that the counterparty to such transaction may not perform as expected.

Equity Equivalent Investments

Equity equivalents include stock index futures contracts and publicly traded index securities. Stock index futures contracts are agreements whereby two parties agree to take or make delivery of an amount of cash based on the value of an index on a specified future date. Investment in index futures contracts allows an investor to participate in the performance of the index without the costs of buying the stocks comprising the index. Equity equivalents may be used for several purposes: (i) to simulate full investment in the underlying index while retaining a cash balance for fund management purposes; (ii) to facilitate trading; (iii) to reduce transaction costs; or (iv) to seek higher investment returns where an equity equivalent is priced more attractively than securities in the index.

that cannot be disposed of quickly in the normal course of business. For example, some securities are not registered under U.S. securities laws and cannot be sold to the U.S. public because of SEC regulations (these are known as “restricted securities”). Securities owned by the Series that are not liquid may be difficult to sell because there may be no active markets for resale and fewer potential buyers. This can make illiquid investments more likely than other types of investments to lose value. In extreme cases it may be impossible to resell them and they can become almost worthless to the Series.

Interest Rate Risk (for income-producing equity securities)

Income producing equity securities may react like fixed-income securities to changes in interest rates. Thus, when interest rates rise, the prices of income-producing equity securities may fall. Conversely, a decrease in interest rates may cause these securities to increase in value.

Investments in Other Investment Companies and Exchange Traded Funds

The Series may invest in securities of other investment companies, including shares of closed-end investment companies, unit investment trusts, and open-end investment companies. Investing in other investment companies involves substantially the same risks as investing directly in the underlying instruments, but may involve additional expenses at the investment company-level, such as portfolio management fees and operating expenses. Certain types of investment companies, such as closed-end investment companies, issue a fixed number of shares that trade on a stock exchange or over-the-counter at a premium or a discount to their net asset value. Others are continuously offered at net asset value, but may also be traded in the secondary market.

The Series may invest in other investment companies to take advantage of investment opportunities in certain countries where the Series otherwise would not be able to invest or where the size of a Series investment in a particular country would be too small.

The Series may also acquire exchange-traded funds or similar securities in order to achieve market or industry exposure pending direct investments in equity securities. An exchange-traded fund is an investment company the shares of which are continuously offered at net asset value only in large aggregations, but are traded on an exchange in smaller amounts.

Assets invested in other investment companies incur a layering of expenses including operating costs, advisory fees and administrative fees that investors in the Series will indirectly bear.

Over-the-Counter Risk

Over-the-counter (OTC) transactions involve risks in addition to those associated with transactions in securities traded on exchanges. OTC-listed companies may have limited product lines, markets or financial resources. Many OTC stocks trade less frequently and in smaller volume than exchange-listed stocks. The values of these stocks may be more volatile than exchange-listed stocks, and the Series may experience difficulty in buying and selling these stocks at prevailing market prices.

Small and Medium Market Capitalization Risk

The Series may invest in companies with small and medium capitalizations, which would make the Series more volatile than funds that invest exclusively in companies with larger capitalizations. The smaller companies may be affected to a greater extent than larger companies by changes in general economic conditions and conditions in particular industries. Smaller companies also may be relatively new and not have the same operating history and “track record” as larger companies. This could make future performance of smaller companies more difficult to predict. Companies with small capitalization are often companies in industries that have recently emerged due to cultural, economic, regulatory or technological developments. Such developments can have a significant positive or negative effect on small capitalization companies and their stock performance. Given the limited operating history and rapidly changing fundamental prospects, investment returns from smaller capitalization companies can be highly volatile. Smaller companies may find their ability to raise capital impaired by their size or lack of operating history. Product lines are often less diversified and subject to competitive threats. Smaller capitalization stocks are subject to varying patterns of trading volume and may, at times, be difficult to sell.

Value Investing Risk

The Series may invest in value stocks. Value stocks are those which are believed to be undervalued in comparison to their peers due to adverse business developments or other factors. The value approach to investing involves the risk that the value of the security will not be recognized for an unexpectedly long period of time, and the risk that the security judged to be undervalued may actually be appropriately priced or even overvalued due to fundamental problems not yet apparent. Value oriented stock will typically underperform when growth investing is in favor.

Volatility Risk

This is the risk that performance will be affected by unanticipated events (e.g., significant earnings shortfalls or gains, war, or political events) that cause major price changes in individual securities or market sectors.

Management of the Series

The Advisor

PVA is the investment advisor to the Series.

Pursuant to the Investment Advisory Agreement with the Series and subject to the direction of the Trust’s Board of Trustees, PVA is responsible for managing the Series’ investment program in conformity with the stated policies of the Series as described in this prospectus. PVA, with the approval of the Trust’s Board of Trustees, has selected Aberdeen, to serve as subadvisor and perform the day-to-day management of the Series. Aberdeen, subject to the supervision of PVA, is responsible for deciding which securities to purchase and sell for the Series and for placing the Series’ transactions.

PVA serves as a manager of managers of the Series. In this capacity, PVA: (i) sets the Series’ overall investment strategies;

(ii) evaluates, selects, and recommends to the Board one or more subadvisors needed to manage all or part of the assets of the Series; (iii) monitors and evaluates the subadvisors’ investment programs and results as well as the performance of the subadvisors relative to the applicable benchmark indexes; and (iv) reviews the Series’ compliance with its investment objectives, policies and restrictions.

The Trust and PVA have received an exemptive order from the SEC granting exemptions from certain provisions of the Investment Company Act of 1940, as amended, pursuant to which PVA is permitted, subject to supervision and approval of the Trust’s Board of Trustees, to enter into and materially amend subadvisory agreements without such agreements being approved by the shareholders of the Series. The Trust and PVA therefore have the right to hire, terminate, or replace subadvisors without shareholder approval, including, without limitation, the replacement or reinstatement of any subadvisor with respect to which a subadvisory agreement has automatically terminated as a result of an assignment. PVA has the ultimate responsibility to oversee the subadvisors and recommend their hiring, termination, and replacement.

PVA began operations as an investment advisor in 1999 and replaced a PVA affiliate as investment advisor to the Series in 2007. Serving as the investment advisor for the series of the Trust is PVA’s sole business activity. As of December 31, 2008, PVA had $1.67 billion in assets under management. PVA is located at One American Row, Hartford, Connecticut 06102-5056.

The Subadvisor

Aberdeen is the subadvisor to the Series. Aberdeen is a wholly owned subsidiary of Aberdeen Asset Management PLC which was founded in 1983 and through subsidiaries operating worldwide, provides investment management services to other mutual fund portfolios, unit investment trusts, segregated pension funds and other institutional and private portfolios. As of December 31, 2008, Aberdeen Asset Management PLC, and its advisory subsidiaries, had approximately $158 billion in assets under management. Aberdeen Asset Management PLC’s principal offices are located at One Bow Churchyard, Cheapside, London EC4M 9HH.

Fees and Expenses Paid by the Series

For the fiscal year ended December 31, 2008, the Series paid PVA a fee for the investment advisory services it performed at an annual percentage rate of 0.75% of the average daily net assets of the Series.

From its investment advisory fee, PVA, not the Series, pays Aberdeen for the management services it provides to the Series. (Please see the SAI for more information on subadvisory fees.)

The Trust has entered into an expense limitation agreement with PVA whereby PVA has agreed to reimburse the Series for expenses necessary or appropriate for the operation of the Series (excluding advisory and management fees, Rule 12b-1 fees, taxes, interest, brokerage commissions, expenses incurred in connection with any merger or reorganization, and extraordinary expenses such as litigation expenses) to the extent that such

expenses exceed 0.30% of the Series’ average net assets. This expense limitation agreement is effective through April 30, 2010.

voting rights of the separate accounts as shareholders are passed through to the contract owners. Shareholders of all series of the Trust currently vote on the election of Trustees and other matters. On matters affecting an individual series such as the Series (such as approval of an advisory or subadvisory agreement or a change in fundamental investment policies), a separate vote of that series is required. The Trust is not required to hold annual shareholder meetings.

Series shares attributable to any insurance company assets and Series shares for which no timely instructions from contract owners are received will be voted by the appropriate insurance company in the same proportion as those shares for which instructions are received.

Shares are fully paid, nonassessable, redeemable and fully transferable when they are issued. Shares do not have cumulative voting rights, preemptive rights or subscription rights.

The assets received by the Trust for the issue or sale of shares of the Series, and all income, earnings, profits and proceeds thereof, subject only to the rights of creditors, are allocated to the Series, and constitute the underlying assets of the Series. The underlying assets of the Series are required to be segregated on the books of account, and are to be charged with the expenses of the Series and with a share of the general expenses of the Trust. Any general expenses of the Trust not readily identifiable as belonging to a particular series shall be allocated by or under the direction of the Trustees in such manner as the Trustees determine to be fair and equitable.

Unlike the stockholders of a corporation, there is a possibility that the separate accounts as shareholders of a Massachusetts business trust such as the Trust may be liable for debts or claims against the Trust. The Declaration of Trust provides that shareholders shall not be subject to any personal liability for the acts or obligations of the Trust and that every written agreement, undertaking or obligation made or issued by the Trust shall contain a provision to that effect. The Declaration of Trust provides for indemnification out of the Trust’s property for all losses and expenses of any shareholder held personally liable for the obligations of the Trust. Thus, the risk of the separate accounts, as shareholders, incurring loss because of shareholder liability is limited to circumstances in which the Trust itself would be unable to meet its obligations. The Insurance Companies are the sole shareholders of the Trust, and contract owners and policy owners are fully and completely insulated from the risk of personal liability.

Taxes

The Trust intends for the Series to qualify as a regulated investment company (a “RIC”) by satisfying the requirements under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), including requirements with respect to diversification of assets, distribution of income, and sources of income. In general, a series that qualifies as a RIC will be relieved of Federal income tax on its net investment income and net capital gains distributed to its shareholders. In addition, the Trust intends for the Series to comply with the investment diversification requirements for variable contracts contained in

the Code. Moreover, the Trust intends to distribute sufficient net investment income and net capital gains of the Series to avoid imposition of any Federal excise tax.

Accordingly, the Trust intends that, at the close of each quarter of the taxable year, (i) not more than 25% of the market value of the Series’ total assets will be invested in the securities of a single issuer and (ii) with respect to 50% of the market value of the Series’ total assets, not more than 5% of the market value of the Series’ total assets will be invested in the securities of a single issuer and the Series will not own more than 10% of the outstanding voting securities of a single issuer.

Actual and deemed distributions of ordinary income and net capital gains generally are taxable to the Series’ shareholders, which in this case are the separate accounts. Because the sole shareholders of the Series will be the separate accounts, no discussion is included in this prospectus as to the federal income tax consequences at the shareholder level. For information concerning the federal income tax consequences to purchasers of the contracts, please see the contract prospectuses.

Disruptive Trading and Market Timing

As an investment vehicle for variable contracts, which are designed as long-term investments, the Series is not appropriate for “market timing” or other trading strategies that entail rapid or frequent investment and trading. Frequent purchases, redemptions and transfers, transfers into and then out of the Series in a short period of time, and transfers of large amounts at one time may be indicative of market timing and otherwise disruptive trading (“Disruptive Trading”), which can have risks and harmful effects for other investors. These risks and harmful effects include:

Because the Series invests primarily in international securities, it may be more susceptible to pricing arbitrage opportunities than a fund that invests primarily in domestic securities as a result of time zone differences between the closing of international and domestic markets.

In order to attempt to protect Trust investors, the Trust’s Board of Trustees has adopted market timing policies reasonably designed to discourage Disruptive Trading. The Trust reserves the right to amend these policies at any time without prior notice. Because the record owners of the Series are the Insurance Companies and not the contract owners, the Trust is not ordinarily in a position to monitor for or uncover Disruptive Trading by contract owners. Therefore, under the Trust’s policies, the Trust delegates to each Insurance Company the duty to establish and maintain policies and procedures designed to

detect, monitor and deter (including, without limitation, by rejecting specific purchase orders) investors (or their agents) whose purchase and redemption activity follows a Disruptive Trading pattern, and to take such other actions as the Insurance Company may deem necessary to discourage or reduce Disruptive Trading activities. An Insurance Company may only modify such policies and procedures if it provides reasonable notice to the Trust and the Trust’s Chief Compliance Officer. Please see your variable contract prospectus for information relating to applicable restrictions on purchases or transfers through your variable contract.

The Trust may also take certain actions to stop Disruptive Trading, including imposing redemption fees for the Series and ceasing sales of additional shares of the Series to a separate account through which contract owners are engaging in Disruptive Trading. Because the Trust reserves discretion in applying these policies, they may not be applied uniformly. In addition, the Trust, as required under SEC regulations, has entered into an agreement with each Insurance Company under which the Insurance Companies have agreed to provide the Trust or its designee with information about variable contract owner transactions in the Series upon request.

Although the Trust will endeavor to ensure that each Insurance Company can and does identify and deter Disruptive Trading by its variable contract owners, the Trust cannot control their efforts or guarantee their success at deterrence. In addition, the Trust cannot guarantee that monitoring by the Insurance Companies and the Trust will be 100% successful in detecting all Disruptive Trading activity. Consequently, there is a risk that some investors could engage in Disruptive Trading while others will bear the effects of their Disruptive Trading activities.

Investing in the Series

Shares of the Series are not available to the public directly. Although shares of the Series are owned by the Separate Accounts, contract owners and policy owners do have indirect voting rights with respect to those shares, as described in the prospectus under “Shares of Beneficial Interest.” You may invest in the Series by buying a variable accumulation annuity contract or a variable universal life insurance policy from an Insurance Company and directing the allocation of the net purchase payment(s) to the investment option corresponding to the Series. The appropriate Insurance Company will, in turn, invest payments in shares of the Series as the investor directs at the net asset value next determined with no sales load.

Sales Charge and Surrender Charges

The Series does not assess any sales charge, either when it sells or when it redeems securities. The sales charges that may be assessed under the contracts or policies are described in the contract prospectuses, as are other charges.

Determination of Net Asset Value

The net asset value per share of the Series is determined as of the close of regular trading of the NYSE on days’ when the NYSE is open for trading. Since the Series does not price

securities on weekends or United States national holidays, but foreign markets may be open on these days, the value of any foreign assets of the Series and, therefore, the Series’ net asset value may be significantly affected on days when an investor has no access to the Series. The net asset value per share of the Series is determined by adding the values of all securities and other assets of the Series, subtracting liabilities and dividing by the total number of outstanding shares of the Series. Assets and liabilities are determined in accordance with generally accepted accounting principles and applicable rules and regulations of the SEC.

Assets: Equity securities are valued at the official closing price (typically last sale) on the exchange on which the securities are principally traded or, if no closing price is available or there had been no sale that day, at the last bid price. Debt securities are valued on the basis of broker quotations or valuations provided by a pricing service which utilizes information with respect to recent sales, market transactions in comparable securities, quotations from dealers, and various relationships between securities in determining value. Short-term investments having a remaining maturity of 60 days or less are valued at amortized cost, which approximates market value. All other securities and assets are valued at their fair value as determined in good faith by or under the direction of the Trustees.

A security that is listed or traded on more than one exchange is valued at the quotation on the exchange determined to be the primary exchange for such security by the Trustees or their delegates. Because of the need to obtain prices as of the close of trading on exchanges throughout the world, the calculation of the net asset value of the Series may not take place contemporaneously with the determination of the prices of certain portfolio securities of the Series. All assets and liabilities initially expressed in foreign currency values will be converted into United States dollar values using the foreign currency exchange rate of such currencies against United States dollars as last quoted by any recognized dealer. If an event were to occur after the value of an investment was so established but before the net asset value per share was determined, which was likely to materially change the net asset value, then the instrument would be valued using fair value considerations by the Board or its delegates.

Shares of other investment companies are valued at their respective net asset values. Other assets, such as accrued interest, accrued dividends and cash are also included in determining the Series’ net asset value.

Liabilities: Accrued liabilities for the Series-specific expenses (if any) and other liabilities are deducted from the assets of the Series. Accrued expenses and liabilities that are not Series-specific are allocated among the series in proportion to each series’ net assets except where an alternative allocation can be more appropriately made.

Net Asset Value: The liabilities are deducted from the assets of the Series. The resulting amount for the Series is then divided by the number of shares outstanding of that Series to produce the net asset value per share.

Fair Valuation

If market quotations are not readily available or where available prices are not reliable, the Series determines a “fair value” for an investment according to rules and procedures approved by the Board. The types of assets for which such pricing might be required include: (i) securities whose trading has been suspended; (ii) securities where the trading market is unusually thin or trades have been infrequent; (iii) debt securities that have recently gone into default and for which there is no current market quotation; (iv) a security whose market price is not available from an independent pricing source and for which otherwise reliable quotes are not available; (v) securities of an issuer that has entered into a restructuring; (vi) a security whose price as provided by any pricing source, does not, in the opinion of the advisor/subadvisor, reflect the security’s market value; (vii) foreign securities subject to trading collars for which none or limited trading takes place; and (viii) securities where the market quotations are not readily available as a result of “significant” events. This list does not include all situations that may require a security to be fair valued, nor is it intended to be conclusive in determining whether a specific event requires fair valuation.

The value of a portfolio security held by the Series for which market quotations are not readily available shall be determined in good faith and in a manner that assesses the security’s “fair value” on the valuation date ( i.e. , the amount that the Series might reasonably expect to receive for the security upon its current sale), based on a consideration of all available facts and all available information, including, but not limited to, the following: (i) the fundamental analytical data relating to the investment; (ii) an evaluation of the forces which influence the market in which these securities are purchased and sold ( e.g. , the existence of merger proposals or tender offers that might affect the value of the security); (iii) price quotes from dealers and/or pricing services; (iv) an analysis of the company’s financial statements; (v) recent news about the security or issuer; (vi) changes in interest rates; (vii) information obtained from the issuer, analysts, other financial institutions and/or the appropriate stock exchange (for exchange traded securities); (viii) whether two or more dealers with whom the advisor regularly effects trades are willing to purchase or sell the security at comparable prices; (ix) other news events or relevant matters; and (x) government (domestic or foreign) actions or pronouncements.

Certain foreign common stocks may be fair valued in cases where closing prices are deemed not reflective of readily available market prices. For example, significant events (such as movement in the U.S. securities market, or other regional and local developments) may occur between the time of closing of the foreign market where the security is principally traded and the time that the Series calculates its net asset value (generally, the close of the NYSE) that may impact the value of securities traded in these foreign markets. In these cases, information from an external vendor may be utilized to adjust closing market prices of certain foreign common stocks to reflect their fair value. Because the frequency of significant events is not predictable, fair valuation of certain foreign common stocks may occur on a frequent basis.

The value of a security, as determined using the Series’ fair valuation procedures, may not reflect such security’s market value.

A description of the Trust’s policies and procedures with respect to the disclosure of the Series’ portfolio securities is also available in the SAI.

Litigation Matters

Legal Proceedings about the Series and PVA and/or its Affiliates

The Trust is not involved in any litigation or arbitration. PVA and/or its insurance affiliates (“Phoenix”) are regularly involved in litigation and arbitration, both as a defendant and as a plaintiff. The litigation and arbitration naming Phoenix as a defendant ordinarily involves our activities as an insurer, investor, or taxpayer. Phoenix believes that the outcomes of any pending litigation and arbitration matters are not likely, either individually or in the aggregate, to have a material adverse effect on Phoenix's consolidated financial condition. However, given the large or indeterminate amounts sought in certain of these matters and the inherent unpredictability of litigation and arbitration, it is possible that an adverse outcome in certain matters could, from time to time, have a material adverse effect on Phoenix's results of operations or cash flows in particular quarterly or annual periods.

The principal risks of investing in the Series, which could adversely affect its net asset value, yield and total return, are:

The following is a description of each of these principal risks. A description of other risks that may affect the Series is included below under “Other Investment Strategies and Risks.”

Equity Securities Risk. In general, prices of equity securities are more volatile than those of fixed-income securities. The prices of equity securities will rise and fall in response to a number of different factors. In particular, equity securities will respond to events that affect entire financial markets or industries (changes in inflation or consumer demand, for example) and to events that affect particular issuers (news about the success or failure of a new product, for example).

Growth Stock Investment Risk. Growth stocks may be more volatile than other stocks because they are more sensitive to investor perceptions of the issuing company’s growth of earnings potential. Also, because growth stocks typically make little or no dividend payments to shareholders, investment return is based on a stock’s capital appreciation, making return more dependent on market increases and decreases. Growth stocks are therefore more volatile than non-growth stocks, tending to rise faster when markets rise and drop more sharply when markets fall. Growth investing will typically underperform when value investing is in favor.

Larger Market Capitalization Risk. Companies with large capitalizations go in and out of favor based on market and economic conditions. Larger companies tend to be less volatile than companies with smaller market capitalizations. In exchange for this potentially lower risk, the value of the Series may not rise as much as the value of a fund that emphasizes companies with smaller market capitalizations.

Market Risk. The value of your shares is based on the market value of the Series’ investments. However, the value of the Series’ investments that support your share value can decrease as well as increase. If between the time you purchase shares and the time you sell shares the value of the Series’ investments decreases, you will lose money. If your financial circumstances are likely to require you to sell your shares at any particular time, rather than holding them indefinitely, you run the risk that your sale of shares will occur when share values have declined.

The value of the Series’ investments can decrease for a number of reasons. For example, changing economic conditions may cause a decline in the value of many or most investments. Particular industries can face poor market conditions for their products or services so that companies engaged in those businesses do not perform as well as companies in other

industries. Interest rate changes may improve prospects for certain types of businesses and they may worsen prospects for others. Share values also can decline if the specific companies selected for investment fail to perform as expected, regardless of general economic trends, industry trends, interest rates and other economic factors. When companies owned by the Series encounter negative conditions they may be unable to continue to pay dividends or interest at expected levels.

Portfolio Turnover Risk. The Series may, consistent with its investment policies, purchase and sell securities without regard to the effect on portfolio turnover. High portfolio turnover (e.g. over 100%) involves correspondingly greater expenses to the Series, including brokerage commissions or dealer mark-ups and other transaction costs on the sale of securities and reinvestments in other securities. The trading costs associated with portfolio turnover may adversely affect the Series’ performance.

Securities Selection Risk. There is the possibility that the specific securities held by the Series will underperform the securities held by other funds in the same asset class or the benchmark that is representative of the general performance of the asset class because of the subadvisor’s choice of portfolio securities.

Calendar Year Annual Total Return

The following bar chart and table provide some indication of the risks of investing in the Series. The bar chart shows changes in the Series’ total return performance from year to year over a 10-year period. The table shows how the Series’ average annual returns compare to those of a broad-based securities market index and a more narrowly based benchmark that reflects the market sectors in which the Series invests. The Series’ past performance is not necessarily an indication of how the Series will perform in the future. Neuberger Berman Management LLC became subadvisor of the Series on September 15, 2008, and was not responsible for the performance of the Series prior to that time. The Series’ returns in the chart and table do not reflect the deduction of any separate account or contract charges. The returns would have been less than those shown if such charges were deducted. During the 10-year period shown in the chart, the highest return for a quarter was 26.53% (quarter ended December 1999) and the lowest return for a quarter was -29.19% (quarter ended September 2001).

The indices are unmanaged and not available for direct investment; therefore, the performance does not reflect the fees and expenses associated with the active management of an actual portfolio.

Series Fees and Expenses

This table describes the fees and expenses that you may pay if you buy and hold shares of the Series. The table and the example do not include any fees or sales charges under the variable contracts for which the Series is an investment option. If they were included, your costs would be higher. Investors should consult the contract prospectus for more information.

Annual Series Operating Expenses (expenses that are deducted from the Series’ assets)

The Trust has entered into an expense limitation agreement with PVA whereby PVA has agreed to reimburse the Series for expenses necessary or appropriate for the operation of the Series (excluding advisory and management fees, Rule 12b-1 fees, taxes, interest, brokerage commissions, expenses incurred in connection with any merger or reorganization, and extraordinary expenses such as litigation expenses) to the extent that such expenses exceed 0.25% of the Series’ average net assets). This expense limitation agreement is effective through April 30, 2010.

Example

This example is intended to help you compare the cost of investing in the Series with the cost of investing in other mutual funds.

The example assumes that you invest $10,000 in the Series for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Series’ operating expenses remain the same. The example does not reflect contract fees and charges, and if it did, the costs shown would be higher.