VRS Achieves 12.4 Percent Return

RICHMOND, VA, August 17, 2006 - The Virginia Retirement System (VRS) announced a 12.4 percent return on its investment portfolio for fiscal year 2006, ending the year with $48.5 billion. This return surpassed the benchmark of 11.8 percent for investments of the type held by the VRS Trust Fund

The fund's private equity and real estate investments produced outstanding returns, at 28.6 percent and 23.4 percent respectively. In addition, the system saw a 15.3 percent return in public equity (U.S. and international stocks), a 5.3 percent return in credit strategies and a -0.6 percent return in fixed income.

"The economy was strong, and market conditions were favorable for equity and real estate investments. We are pleased that the fund's diversified portfolio produced attractive returns at an acceptable level of risk," said Chief Investment Officer Charles W. Grant.

The portfolio included $31.8 billion in public equity, $9.7 billion in fixed income, $2.7 billion in private equity, $2.3 billion in real estate and $2.0 billion in credit strategies, as of June 30, 2006. The three-year annualized return was 14.0 percent and the five-year annualized return was 7.1 percent.

"The VRS investment staff did a terrific job. Utilizing strategies approved by the Board, the staff’s management of the portfolio beat the benchmark by 0.6 percent and added approximately $285 million in excess returns," said Board Chairman Paul W. Timmreck.

VRS serves over 562,000 active members, retirees and beneficiaries. The active employees include about 142,000 teachers, 98,000 local government employees and about 92,000 state employees. In addition, VRS provides benefits to over 124,000 retirees and beneficiaries. The retirement system ranks as the nation's 25th largest public or private pension fund and the 48th largest internationally.

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