Separate Account – Domestic Fixed Income Style Definitions

CAI Active Cash Style
Managers whose objective is to achieve a maximum return on short-term financial instruments through active management. The average portfolio duration is typically less than one year.

CAI Defensive Style
Managers whose objective is to minimize interest rate risk by investing predominantly in short- to intermediate-term securities. The average portfolio duration and risk/return profile is similar to that of the Merrill Lynch 1-3 Year Bond Index.

CAI Intermediate Style
Managers whose objective is to lower interest rate risk while retaining reasonable yield levels by investing primarily in intermediate-term securities. The average portfolio duration and risk/return profile is similar to that of the Lehman Brothers Intermediate Government/Corporate Bond Index.

CAI Core Bond Style
Managers who construct portfolios to approximate the investment results of the Lehman Brothers Government/Corporate Bond Index or the Lehman Brothers Aggregate Bond Index with a modest amount of variability in duration around the index. The objective is to achieve value-added from sector and/or issue selection.

CAI Core Plus Style
Managers, benchmarked against the broad market (i.e. Lehman Brothers Aggregate Index), whose objective is to add value by tactically allocating significant portions of their portfolios among non-benchmark sectors (e.g. high yield corporates, non-US$ bonds, etc.) while maintaining majority exposure similar to the broad market.

CAI Extended Maturity Style
Managers whose average portfolio duration is significantly greater than that of the Lehman Brothers Government/Corporate Bond Index. These portfolios exhibit risk/return characteristics similar to the long-bond portion of the Lehman Brothers Government/Corporate Index, called the Lehman Brothers Government/Corporate Long Bond Index. Variations in bond portfolio characteristics are made to enhance performance results. This results in an aggressive risk/return profile that embraces interest rate risk in search of both high yields as well as capital gains.

CAI High Yield Style
Managers whose investment objective is to obtain high current income by investing primarily in non-investment grade fixed income securities. Due to the increased level of default risk, security selection focuses on credit-risk analysis.

CAI Mortgage Backed Style
Managers who invest primarily in mortgage-backed securities including agency (FHLMC, GNMA, FNMA) and private issue pass-throughs, asset-backed securities, and mortgage derivatives (REMICS/CMOs, IOs, POs). Funds may also contain a small percentage of U.S. Treasuries. Mortgage-backed securities, which are secured by thousands of mortgages held by American families, are relatively safe investments. The Government National Mortgage Association or "Ginnie Mae" issues the safest mortgage-backed securities of all. They are the only securities, other than U.S. Treasury issues, that carry the full faith and credit guarantee of the federal government.