Peach State Reserves news, Summer 2005

Summer 2005

Peach State Reserves News
VOLUME I, NUMBER I

We Have Moved! As many of you know, during the 2005 Legislative session, House Bill 275 was passed which moved Peach State Reserves to the Employees' Retirement System (ERS) of Georgia. ERS currently administers retirement benefits for many of the state's defined benefit plans and the Georgia Defined Contribution Plan. As a part of that move, you'll see some changes in our communications, such as our new Quarterly Peach State Reserves Newsletter, but our commitment to outstanding service remains unchanged.

Quarterly Account Statement Enclosed is your Quarterly Account Statement
covering investment activity in Peach State
Reserves-The Georgia Retirement Investment
Plan. This statement is for the period of April 1,
2005 through June 30, 2005. If you have any
questions, contact Great-West between 9 a.m. and 7 p.m., Monday through Friday, at 1-800-7018255. Also enclosed is the Investment Options at
a Glance, showing comparative performances of the investment options.

Please bookmark our new website address at www.ersga.org. We welcome your feedback and look forward to making more improvements in the future.
A Message From Our New Executive Director
Mike Nehf joined ERS in January 2005 with nearly 20 years of pension administration with previous retirement systems in Chicago, Illinois. Mike sees the addition of Peach State Reserves allowing ERS to provide retirement planning and education of both the deferred compensation savings plans and the defined benefit plans together in an easy to understand and helpful process. He sees the opportunity to improve members' ability to plan for an affordable retirement with improved communications and financial planning tools. Mike also envisions ERS making a commitment to visit all departments and areas within the State to make ERS educational seminars more accessible to everyone. The result will be a more educated and financially secure State employee. Other noticeable improvements will include a greater selection of investment services and products available to participants. "Our vision is to become a premier retirement system a customer-centric system using leading edge technologies to serve our members, retirees and beneficiaries."

Fixed Income Option Changes to Daily Valuation
The Plan's Investment Committee has selected JP Morgan to manage the Fixed Income Option (FIO). In conjunction with the change, the FIO will be priced daily beginning July 19th and will have an NAV (Net Asset Value), just like a mutual fund. The investment income will be reinvested daily and as a result the NAV is expected to increase daily reflecting the net yield of the fund for that day.
At the beginning of each quarter, the investment manager will project a range for the expected return of the FIO, which will be communicated to the participants. There is no guarantee that the fund will earn a yield within this range. The return may be higher or lower. For the current quarter ending September 30, 2005, the return will continue to be 4.55% until July 19th, when the projected range is expected to be between 4.25% and 4.75% until the end of the quarter.
Based upon extensive analysis, it is anticipated that this change will increase the return otherwise earned by the FIO and improve the diversification of the investments in the fund.

Rebalancing one of the Keys to Successful Investing
Most successful investors employ strategies to increase their chances for success. One of these strategies is maintaining balance in their portfolios. Balance simply means having the right mix of investments for your age, financial goals and risk tolerance. For example, a younger investor whose primary interest is growth may choose to invest heavily in stocks. Younger investors have the time to withstand the ups and downs of the stock market. By contrast an older investor, whose primary interest is preserving assets for short term needs, may choose to invest heavily in guaranteed fixed investments. However, once you have identified the right mix of investments and set up your portfolio, your work is not over. Portfolios must be periodically adjusted or rebalanced to achieve the desired objective.
Rebalancing is a concept that forces many people to adhere to the fundamental principle of buying low and selling high. Take for example an older investor who sets up a portfolio that is comprised of 50% fixed investments and 50% stock investments. A year later if there is a bull market and stock prices are going up rapidly, the value of stock in this portfolio could easily grow to 60%. If he does nothing, he no longer has a portfolio suitable for age, financial goals or risk tolerance. If he allows his emotions to take over and liquidates some of the fixed investments to invest in the stock market he could in fact be buying stocks when prices are high and selling fixed investment when their prices are low. This is just the opposite of what most financial experts recommend. Rebalancing helps you to avoid this mistake. It helps you stay on course to reach your goals.

options, they can simply go on-line at www.ersga.org or call 1-800-701-8255 to rebalance their portfolios or to set up an automatic rebalancer for future periods (six months or annually).
Rebalancing is one of the keys to being a successful investor. If you want to increase the likelihood of reaching your goal don' t overlook this important concept.
Deductions From Annual Leave Payout are Permissible
In last quarter's statement letter, we indicated that due to IRS interpretation, contributions to Peach State Reserves could not be deducted from Annual Leave checks that were paid after separation from service. After intense lobbying from employers, the IRS has changed their interpretation and will allow deductions from Annual Leave payouts as long as the payout is made within 2 months after separations from service. If you're interested in maximizing your tax savings, contact your personnel or payroll office to complete the form to change your deduction amount, or enroll in order to make the contribution.

Peach State Reserves makes it easy for employees to utilize this important strategy. Each of the three model portfolios is automatically rebalanced every quarter. For those participants who create their own portfolios by choosing individual investment

Peach State Reserves Two Northside 75
Atlanta, GA 30318-7778 www.ersga.org