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Choices!

Here is a brief description of the three investment choices available to in-service TRS and BERS members under current law:

  • The Fixed Annuity. The least volatile investment choice, it is the only one with a guaranteed rate of return. The Fixed fund currently pays 8.25 percent return per year, a rate which is guaranteed until June 30, 2009. The state Legislature reviews this rate and may adjust it up or down, but not below 7 percent per year. Contributions to the Fixed fund are invested together with the money in the pension fund.
  • Variable A. This is the most volatile of the three choices available since it invests mainly in common stocks. Historically, such broadly diversified equity investments have had the greatest growth, but they also have the greatest risk, since the stock market fluctuates and the value of the principal can drop. In the past, the stock market has always recovered from any downturn, but there is no guarantee that future performance will repeat history. Variable A is probably right for you if your primary investment goal is growth over the long term and you understand the risks of such investment.

    The Variable A program earned 20.16 percent over the last 12 months (July 1, 2006, to June 30, 2007).

    In comparison, the benchmark Russell 3000 Stock Index earned 20.07 percent for the same period.
  • Variable B. (Not available in BERS). This conservative investment choice aims for positive current returns and security of principal by investing primarily in stable fixed-income instruments such as guaranteed investment contracts (GICs) and short-term and money market investments.

    Unlike the Fixed investment choice, there is no guarantee in the Variable B program. When current interest rates are low, as they are today, Variable B’s return can be lower than the return of the Fixed fund. Future interest rates cannot be predicted. The Variable B program earned 4.12 percent over the last 12 months (July 1, 2006, to June 30, 2007).

The chart allows you to compare the investment results of TRS choices with one another. Several time periods are shown, ending on June 30, 2007. The figures indicate annualized returns. Past returns are not a guarantee of future results.

ANNUALIZED TRS INVESTMENT PERFORMANCE

1 Year
7/1/06 to 6/30/07
3 Years
7/1/04 to 6/30/07 		5 Years
7/1/02 to 6/30/07
10 years
7/1/97 to 6/30/07
Fixed Annuity 8.25% 8.25% 8.25% 8.25%
Variable A Annuity 20.16% 13.58% 12.10% 7.83%
Variable B Annuity 4.12% 3.81% 3.70% 4.72%
Russell 3000 benchmark for Variable A 20.07% 12.44% 11.53% 7.62%