CalSTRS Announces Significant Gains for the 2003-04 Fiscal Year

News release

Sacramento, CA – The California State Teachers’ Retirement System has posted its year-end returns for 2003-04.The public pension fund – the third largest in the United States – announced its second straight year of positive performance, with total assets of $116.2 billion on June 30, 2004, and a 17.38 percent return on investments for the year.


“Thanks to our staff’s expertise and strategy, and the guidance of the Teachers’ Retirement Board, we have fully recovered from the bear market,” said Christopher J. Ailman, CalSTRS Chief Investment Officer. “Being overweight in U.S. and non-U.S. equity from the start of the year really paid off. We bought into the market in the summer and fall of 2002, and we held those positions as the market was bottoming. Our diligent process and discipline paid dividends.”

Each of the fund’s five asset classes posted positive returns for the one-year period ending June 30, 2004:

  • Domestic Equity: The U.S. equity market posted a double-digit return with 20.95 percent. This figure beat the overall market return, which was 20.48 percent, as measured by the CalSTRS benchmark, the Russell 3000 ex tobacco Index. According to Ailman, this year’s excellent return was the result of CalSTRS’ active managers’ stellar performance.
  • International Equity: Non-U.S. equity posted a 30.68 percent return, due to both the strength of the non-U.S. markets (particularly the United Kingdom and Japan) and the weakness in the U.S. dollar.
  • Alternative Investments: Benefiting from the rebound of the economy and CalSTRS’ disciplined selection of general partners, Private Equity posted a return of 29.62 percent.
  • Real Estate: The Real Estate portfolio continues its string of double-digit returns over the last several years, posting a 13.20 percent return this year. This is due to a portfolio with a high lease income and the sale of several large properties.
  • Fixed Income: The Fixed Income portfolio posted a .67 percent gain, faring well despite a difficult year in which interest rates began to rise.

Two of the asset classes – Real Estate and Private Equity – also saw a double-digit return over the five-year period ending June 30, 2004 (Real Estate was 10.7 percent and Private Equity was 11.9 percent). These figures topped the U.S. stock market gains, which were -1 percent of the Russell 3000 and -2 percent of the S&P 500 during this same period.

CalSTRS is the third-largest public pension fund in the United States. It provides retirement, disability and survivor benefits to California’s public school teachers from kindergarten through community college, serving more than 735,000 members and their families.