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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 for the TDA program:

  • The Fixed Fund. The least volatile investment choice, it is the only one with a guaranteed rate of return. The Fixed Fund currently pays 8.25%. 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 downturns, 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 and you understand the risks of such investment.
  • Variable B (Not available in the 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 fixed income securities.

    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 will be lower than the return of the Fixed Fund. Future interest rates cannot be predicted.

The chart allows you to compare the investment results of TRS choices with one another. Several time periods are shown, ending on March 31, 2006. For periods longer than one year, the figures indicate average annual returns. Past results are not a guarantee of future results.

ANNUALIZED INVESTMENT PERFORMANCE

1 Year
4/1/05 to
3/31/06		 5 Years
4/1/01 to
3/31/06
10 years
4/1/96 to
3/31/06
Fixed 8.25% 8.25% 8.25%
Variable B 3.7% 4.02% 4.94%
Russell 3000 benchmark for Variable A 9.56% 3.53% 8.52%