Strategy. The Advisor (defined below) seeks to achieve the Portfolios investment objective by allocating assets among securities that represent seven broad asset classes and twelve subcategories using the Advisors 7Twelve TM asset allocation model (the 7Twelve TM Model). The Advisor usually does not select individual stocks and bonds, but instead selects exchange-traded funds (ETFs) or mutual funds (together, underlying funds) that each invest primarily in securities representing one of the 12 subcategories of assets selected under the 7Twelve TM Model. The Portfolio may invest in underlying funds that hold securities from issuers of any market capitalization, credit quality, maturity, country, or trading currency. However, bond credit quality will be primarily investment grade (that is, rated Baa3 or higher by Moodys Investors … Show more… The Advisor (defined below) seeks to achieve the Portfolios investment objective by allocating assets among securities that represent seven broad asset classes and twelve subcategories using the Advisors 7Twelve TM asset allocation model (the 7Twelve TM Model). The Advisor usually does not select individual stocks and bonds, but instead selects exchange-traded funds (ETFs) or mutual funds (together, underlying funds) that each invest primarily in securities representing one of the 12 subcategories of assets selected under the 7Twelve TM Model. The Portfolio may invest in underlying funds that hold securities from issuers of any market capitalization, credit quality, maturity, country, or trading currency. However, bond credit quality will be primarily investment grade (that is, rated Baa3 or higher by Moodys Investors Service, or equivalently rated by another nationally recognized statistical rating organization). The Portfolio may also buy underlying funds that invest in foreign securities traded on exchanges outside the U.S. and through American depositary receipts (ADRs). Under normal market conditions, the Portfolio invests at least 25% of its assets in equity securities (common stocks) and at least 25% of its assets in bonds. For purposes of meeting these 25% allocations, the Portfolio defines equity securities to include underlying funds that invest primarily in equity securities and defines bonds to include underlying funds that invest primarily in bonds and other fixed income securities. Unlike traditional diversification strategies that rely primarily on two asset classes (stocks and bonds) in what is commonly known as a traditional balanced portfolio strategy, the 7Twelve TM Model utilizes multiple asset classes to enhance performance and reduce risk as measured by return volatility. The complete set of asset classes and subcategories utilized under the 7Twelve TM Model are presented in the table below. Assets are initially allocated approximately equally using the 7Twelve TM Model, meaning that each subcategory represents 1/12th of the portfolio. This allocation is maintained by rebalancing the portfolio back to approximately equal portions monthly, quarterly or annually depending on the size of the deviation caused by changes in market value. The Advisor buys and sells securities to rebalance asset class allocations as determined under its 7Twelve TM Model and also sells specific underlying funds when it believes it can be replaced by an underlying fund with greater liquidity, lower expenses or other features that make it an attractive replacement for an existing ETF. Show less