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Annual Report 2003

TO RETIREMENT ASSOCIATION MEMBERS

I am pleased to provide you with the Annual Report of the Stanislaus County Employees Retirement Association (StanCERA) for the fiscal year ended June 30, 2003.

StanCERA remains very healthy despite several years of down financial markets. Investments for the year returned 5.6% and outperformed the policy benchmark by over 2%. Total asset of the fund were $963 million.

The Board of Retirement made changes to the interest crediting policy during the fiscal year by changing to a market rate driven interest member crediting policy. The benchmark interest rate paid to members\' accounts is now driven by the prior years earnings with a minimum rate of .25% and a maximum rate of 8%. Based on the prior year returns, interest of .125% semiannually is being credited to members\' accounts as of June 30, 2003. Despite the lower than expected returns for the past three years, StanCERA expects an 8% average annual return over the long term.

The fund provided $43 million is retirement benefits during the year consisting of $37 million in regular retirement benefits and $6 million in supplemental, non-vested benefits. The supplemental benefits provided a substantial offset for the cost of health insurance for our retired members and their beneficiaries during the year. Administrative expenses amounted to $1.1 million or .12% of assets.

StanCERA\'s independent auditor, Brown Armstrong, has audited the financial statements and provided an opinion that the financial statements present fairly, in all material respects, the financial position of StanCERA for the years ended June 30, 2003 and 2002, and the results of its operations for the years then ended in accordance with generally accepted accounting principals. A complete Comprehensive Annual Financial Report (CAFR) can be located on StanCERA\'s website.

Robert Harmon, Administrator

INVESTMENTS
BONDS
MARKET VALUE
U.S. Government
$189,839,085
Corporate Bonds
$127,821,146
TOTAL BONDS
$317,660,231
 STOCKS  
Technology
$74,240,735
Capital Goods & Services
$14,385,610
Energy
$21,060,778
Materials & Services
$107,458,961
Consumer
$105,964,969
Financial
$59,360,413
Transportation
$10,864,921
Utilities
$17,201,265
S&P 500
$47,668,206
Miscellaneous Common Stock
$5,748,210
   
Total Domestic Stocks
International (Putnam)
TOTAL STOCKS
$463,954,068
$146,115,740
$610,069,808


STATEMENT OF PLAN NET ASSETS JUNE 30, 2003


   
FAIR VALUE
 
 ASSETS
DEFINED BENEFIT PENSION PLAN
POST EMPLOYMENT HEALTH Benefit
    TOTAL      
Cash and Cash Equivalents
$  29,482,945
$  3,566,640
$  33,049,585
RECEIVABLES:Bond Interest
   3,429,558
   414,884
  3,844,442
Securities Transactions
4,777,151
577,906
5,355,057
Contributions
1,424,203
172,290
1,596,493

TOTAL RECEIVABLES

 

9,630,912
1,165,080
10,795,992
INVESTMENTS
(At Fair Value):
     
Bonds
283,379,019
34,281,212
317,660,231
Stocks
544,232,381
65,837,427
610,069,808
Collateral on Loaned Securities
185,576,210
-
185,576,210
       
TOTAL Investments
Total Assets
1,013,187,610
100,118,639
1,113,306,249
1,157,151,826

LIABILITIES

PAYABLES:

Accounts Payable
Collateral on Loaned Securities

TOTAL PAYABLES

8,738,684
185,576,210

194,314,894

              --               --

       --

8,738,684
185,576,210

194,314,894

NET ASSETS HELD IN TRUST FOR BENEFITS.
$857,986,573
$104,850,359
$962,836,932

 

STATEMENT OF CHANGES IN PLAN NET ASSETS FOR THE YEAR ENDED JUNE 30, 2003

   
Fair Value
 
 
DEFINED
BENEFIT
PENSION
       PLAN      
POST
EMPLOYMENT
HEALTH
   BENEFITS  
      TOTAL     
Additions:      
Contributions:

Employer

 

$16,207,877

 

$      ---

$16,207,877

Plan members
$18,520,605
    _______---
$18,520,605
Total contributions
$34,728,482
     ______ ---
$34,728,482
Investment Income (Loss)      
Net appreciation (depreciation)in fair value of assets

$20,845,657

 ---

$20,845,657
Interest & Dividends
$29,614,117
---
$29,614,117
Total Investment Income (Loss)
$50,459,774
               ---
$50,459,774
Less Investment Expenses

(2,623,591)

 
(2,623,591)

Net Investment Income

 

47,836,183
 
47,836,183
Securities Lending Activities
Securities Lending Income
Less Securities Lending Expense
Net Securities Lending Income

$3,922,504

(3,325,188)

597,316

$           --  

$           --  

$           --  

$3,922,504

(3,325,188)

597,316

Miscellaneous Income
126,162
       -
126,162

   Total Additions

83,288,143

 

       ---
83,288,143

 

Deductions:  

 

 

 
Pension Benefits
$36,981,411
$       -     
$36,981,411
Insurance Stubsidies
$       -     
$6,454,091
$6,454,071
Member Refunds
$1,561,286
$       -     
$1,561,286
Administrative expenses
$1,048,692
$98,425
$1,147,117
Other
$       -     
$       -     
$       -     
Total deductions
$39,591,389
$6,552,496
$46,143,885
 
      
      
      
Net increase (decrease)
$43,696,754
(6,552,496)
$37,144,258
Transfer of plan assets
(98,425)

(98,425)

       ---
       
Net assets held in trust for benefits

End of year

$814,388,244

 

$857,986,573
  $111,304,430

$104,850,359
$925,692,674
 

$962,836,932

 

STATISTICS

Number of Active Members.
  4,263
Number of Retired-for-Service Members
1,701
Number of Disability Retirements
331
Number of Survivors Death Benefits
35
Deferred Retirements
753