CalPERS U.S. Stocks Return 48 Percent; Performance Pushes Total Fund Return Near 30 Percent.

SACRAMENTO, Calif.--(BUSINESS WIRE)--June 11, 1998--Domestic stocks held by the California Public Employees' Retirement System (CalPERS) earned a 48 percent return for the 12-month period ended March 31,1998, according to a report released by the System.

The performance ratcheted up the System's overall investment return for the period to 29.8 percent, more than double the annual return from the previous one-year period when the Fund earned 11.0 percent.

The Fund's total assets stood at more than $140 billion at the end of the period -- $32 billion higher than one year ago.

In a report presented to CalPERS Investment Committee, Wilshire Associates, the Fund's pension consultant, said CalPERS Board's decision to boost the Fund's exposure to equities in October 1997 was one of the contributing factors to the Fund's overall success.

The report also indicated that sustained economic growth and low inflation continued to increase investors' confidence and advanced all major equity indices. "Our long-term investment strategy and increased exposure to the equity markets has fueled asset growth to its highest level," said Charles P. Valdes, Chair of CalPERS Investment Committee. "The bottom line is that these earnings ensure greater financial security for our members and lower costs to California's taxpayers."

While CalPERS performance may give reason to celebrate the success, Fund officials caution that this growth is critical for future benefit payments and to buffer possible losses in the market.

"It's important to remember that every penny of our earnings will be needed to pay benefits to the thousands of baby boomers who will retire in the years ahead," continued Valdes. "Today's earnings will help us meet these benefit obligations."

CalPERS has more than $96.4 billion invested in the equity markets. Despite continued problems in Asia, the fund's international equity investments captured sizable returns as the European markets provided near record returns slightly outpacing the US market return for the first quarter.

CalPERS witnessed its international equity investments gain 14.6 percent during the quarter versus the U.S. market quarter return of 13.5 percent. Total international equity investments ended the one-year period with a 20.4 percent return, while the Fund's alternative investments yielded 32.3 percent for the year.

CalPERS also benefited from its currency hedging on its international equity investments during the quarter and for the year, according to the report. The dollar appreciated versus most major currencies, including the French franc, Japanese yen and German mark.

The fund's fixed income investments slightly underperformed their benchmark due to low interest rates and a strong U.S. economy that stunted bond returns. The fund's total fixed income investments earned a 14.6 percent return versus the Salomon Large Pension Fund Index, which returned 15.5 percent. CalPERS real estate returned 12.0 percent for the year.

CalPERS is the nation's largest public pension fund. The System provides retirement and health benefits to more than one million public employees and their families. For further information on CalPERS, visit the System's web site at http://www.calpers.ca.gov.

CONTACT: CalPERS Office of Public Affairs 

Brad Pacheco/Pat Macht, 916/326-3991