Basis Point (b.p.) – Smallest measure used in performance of equity and bonds. One basis point (b.p.) is 0.01% or one-hundredth of a percent. Thus 100 basis points equal 1%.
Bottom Up – Investment method that searches for outstanding performance of individual stocks before considering the impact of economic trends, and assume that individual companies can do well even in an industry that is not performing well.
Common Stock – Units of ownership in a public corporation.
Equity – Ownership interest of common and preferred stockholders in a corporation.
Equity Sectors – Variable equity holdings are invested in the following four component sectors.
Actively Domestic Equity – This sector is composed of the following two components:
Eclectic – This component’s manager aims to significantly outperform the Russell 3000 Index by using aggressive stock selection strategies. The returns from eclectic managers are thus likely to be more volatile than those of the risk-controlled managers.
Risk-Controlled – This component’s manager aims to modestly outperform the Russell 3000 Index, while maintaining a level of risk similar to that of the index.
International Equity – This sector is composed of the following four components:
Active International Developed markets - This component’s managers combine bottom-up and top-down stock selection processes that seek to outperform the MSCI EAFE Index.
Emerging Markets – This component’s managers seek opportunities to enhance returns through investments in less developed countries that have a higher expected rate of economic growth than is typical in developed countries. In aggregate, these managers seek to produce returns higher than the MSCI Emerging Markets Free Index over a market cycle (3-5 years).
Passive International – This component’s manager seeks to track the return of the 50% MSCI Europe/50% MSCI Pacific Basin Index over time. Annual returns are expected to be within 200 b.p. of the index.
Risk-Controlled/Enhanced International – This component’s managers seek to outperform the 50% MCSI Europe/50% MSCI Pacific Basin Index by 100-200 b.p. per year. Enhanced performance is sought by modestly overweighing or underweighing specific countries or companies relative to the benchmark.
Passive Core – This sector’s manager uses a sampling methodology to try to match the return of the Russell 3000 Index, which includes approximately 98% of all actively traded domestic common stocks. Annual returns are expected to be within 50 b.p. of the index.
Tactical Asset Allocation – This sector’s managers shift investments among stock, bonds, and cash to try to help reduce the overall risk of the Variable Account and achieve a better performance than the weighted benchmark of 60% of the Standard and Poor’s 500 Index and 40% of the Lehman Treasury Bond Index.
Equity Units – Ownership interests in a co-mingled portfolio of individual stock holdings.
Index – An indicator of the value and market performance of an asset class. Often, a hypothetical portfolio of securities is used for this purpose; examples include Standard and Poor’s 500 Index, Russell 3000 Index, the Morgan Stanley Capital International Europe-Australia-Far East (MSCI EAFE) Index.
Preferred Stock – Corporate-issued securities that entitle investors to priority over common stockholders in the distribution of dividends and earnings.
Securities – A general term for financial instruments such as stock, bonds, money-market accounts, and mutual fund shares.
Top Down – Investment method where the investor first looks at trends in the economy and then selects those industries, and then companies, that should benefit from these trends.
[investment agents] [stocks in the variable account] [variable portfolio]
[variable unit values since inception]