VRS Achieves 12 Percent Return

RICHMOND, Va., August 18, 2005 —The Virginia Retirement System (VRS) Board of Trustees announced that the fund returned 12 percent for fiscal year 2005, ending with assets totaling $44 billion.

Each of the fund’s five asset classes had a positive return during the fiscal year. Real estate led the way posting a 24.4 percent return, closely followed by private equity at 21.5 percent. The public equity portfolio experienced a 12.3 percent return, and the hedge fund portfolio had a 9.0 percent return. Credit strategies returned 7.6 percent and fixed income returned 7.2 percent.

The portfolio had $27.6 billion in public equities, $8.7 billion in fixed income, $1.7 billion in credit strategies, $1.8 billion in real estate, $1.7 billion in hedge funds and $2.2 billion in private equity as of June 30, 2005. The three-year annualized return was 10.6 percent and the five-year annualized return was 3.0 percent.

“The investment staff is very pleased with its investment results for fiscal year 2005. All of the investment programs generated above average returns and the total portfolio exceeded its performance benchmark by a significant margin,” said Acting Chief Investment Officer Charles W. Grant.

Chairman of the Board Paul W. Timmreck added, “In view of the investment staff’s tremendous skill and effort toward increasing the fund, the board voted on August 16 to award incentive compensation payments based on its previously approved plan. These payments are consistent with the benchmark targets that were established for the investment staff.”

A total payment of $1.1 million will be provided to 24 investment professionals, according to their contribution to fund performance. This payment amount represents a small fraction of the value added to the fund resulting from the staff’s investment decisions. Of this payment amount, approximately $292,000 will be placed in a deferred compensation account for senior investment professionals and used as a retention tool.

VRS is the 27th largest public or private pension system in the United States.

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