Investments

PSRS/PEERS returned 26.9% on its investments for the one-year period ended February 28, 2010. The U.S. stock market (as measured by the S&P 500 Index) bottomed at a decade-low almost a year ago on March 9, 2009. Since that time, all markets have improved dramatically and total PSRS/PEERS assets have increased over $6 billion.

Continued signs of economic recovery and investor optimism have been in place for much of the last year and have led to solid gains in the stock market. The optimism has been based in part on the Federal Reserve maintaining short-term interest rates near zero and the pumping of billions of dollars into the economy. Additionally, mild economic improvement was seen on a variety of fronts, including consumer spending, manufacturing, and industrial production. Importantly, the key economic indicators of housing and employment have yet to show meaningful signs of sustainable recovery. We believe that the main focus for investors as we move into the second quarter of 2010 will be on the timing of the withdrawal of federal money from the investment markets and the need to repair fiscal balance sheets.

PSRS/PEERS maintained a diversified asset allocation of stocks, bonds, real estate, hedge funds and private equity throughout the downturn of 2008 and again as the markets regained strength in 2009. This asset allocation is adjusted based on the economic environment and based on opportunities in the market. For example, the Systems maintained a large allocation to high quality bonds, including U.S. Treasury securities, as the credit markets crumbled in 2008. When opportunities presented themselves in 2009, the Systems increased risk asset holdings.

As we move into 2010, we believe that a diversified asset allocation will once again provide the Systems with the best opportunity to achieve consistent and meaningful investment returns over the long-term.

The total assets of both PSRS and PEERS were approximately $26.4 billion on February 28, 2010, making the combined entity larger than all other public retirement plans in the state combined and the 44th largest defined benefit plan in the United States.

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	PSRS/PEERS' Investments Return Over 26% for the Last One Year Period PSRS/PEERS returned 26.9% on its investments for the one-year period ended February 28, 2010. The U.S. stock market (as measured by the S&P 500 Index) bottomed at a decade-low almost a year ago on March 9, 2009. Since that time, all markets have improved dramatically and total PSRS/PEERS assets have increased over $6 billion. Continued signs of economic recovery and investor optimism have been in place for much of the last year and have led to solid gains in the stock market. The optimism has been based in part on the Federal Reserve maintaining short-term interest rates near zero and the pumping of billions of dollars into the economy. Additionally, mild economic improvement was seen on a variety of fronts, including consumer spending, manufacturing, and industrial production. Importantly, the key economic indicators of housing and employment have yet to show meaningful signs of sustainable recovery. We believe that the main focus for investors as we move into the second quarter of 2010 will be on the timing of the withdrawal of federal money from the investment markets and the need to repair fiscal balance sheets. PSRS/PEERS maintained a diversified asset allocation of stocks, bonds, real estate, hedge funds and private equity throughout the downturn of 2008 and again as the markets regained strength in 2009. This asset allocation is adjusted based on the economic environment and based on opportunities in the market. For example, the Systems maintained a large allocation to high quality bonds, including U.S. Treasury securities, as the credit markets crumbled in 2008. When opportunities presented themselves in 2009, the Systems increased risk asset holdings. As we move into 2010, we believe that a diversified asset allocation will once again provide the Systems with the best opportunity to achieve consistent and meaningful investment returns over the long-term. The total assets of both PSRS and PEERS were approximately $26.4 billion on February 28, 2010, making the combined entity larger than all other public retirement plans in the state combined and the 44th largest defined benefit plan in the United States.