CalPERS Earns 23.3 Percent for the Year.

Business Editors

SACRAMENTO, Calif.--(BUSINESS WIRE)--Feb. 19, 2004

The California Public Employees' Retirement System (CalPERS) posted double digit investment returns last year.

The System' Board receive the good news today from Mark Anson, CalPERS Chief Investment Officer, who reported the fund earned a 23.3 percent return on its investments for the 12 months ending December 31, 2003, outperforming the Fund's benchmark by over 200 basis points.

CalPERS performance was the highest the pension fund's board has seen since a 25.3 percent gain was reported in 1995. The Fund's total assets stood at $161.1 billion at the end of the calendar year -- $30.4 billion more than one year earlier.

"Slow and steady wins the race," said Rob Feckner, Chair of CalPERS Investment Committee. "Our members can be assured that their financial future remains secure and the Fund is well prepared to meet our benefit obligations."

CalPERS performance in 2003 exceeded the 8.25 percent average annual return required to meet projected retirement obligations to the System's retirees.

The return data is also used to project future rates for CalPERS largest employer, the State of California, and its more than 2,400 local public agency employers.

"While we are encouraged that the outlook for our fiscal-year investment return will be good, we are not completely out of the woods," said Feckner. "We are hopeful these gains will have a positive impact on employer contributions, but the benefits will be seen long-term, not immediately."

All of CalPERS asset classes enjoyed good returns in 2003.

The System's U.S. stock investments returned more than 31 percent to eclipse the Wilshire 2500 benchmark of 30.7 percent. CalPERS international stock holdings earned 38.8 percent, while hedge fund investments returned 16.7 percent.

CalPERS investments in funds that use corporate governance strategies to turn around ailing companies gained 39.3 percent.

The Fund's fixed income investments also performed well. International fixed income investments gained 19.8 percent, compared with its Salomon Brothers World Government Index benchmark of 18.5 percent, while U.S. fixed income investments earned 9.5 percent, more than 4 percentage points over the benchmark.

Assets of the Alternative Investment Management Program, which specializes in private equity holdings, grew by 1.8 percent compared with to a benchmark that lost 7.8 percent.

CalPERS investments in real estate, which are largely office, retail, apartment and industrial assets, gained 8.5 percent. The System's investments in housing, timber and other specialized real estate assets earned 20.4 percent. Both portfolios exceeded the NCREIF Property Index that returned 7.8 percent.

Today, 68 percent of the CalPERS portfolio is invested in equities, 25 percent in bonds and other fixed income and 7 percent in real estate.

CalPERS is the nation's largest public pension fund. The System provides retirement and health benefits to more than 1.4 million public employees and their families. For additional information about CalPERS, please visit www.calpers.ca.gov.