Peach State Reserves news [1st quarter, Jan.-Mar. 2008]

FIRST QUARTER
2008
news

> New look, expanded content!

Inside you'll find timely articles from SmartMoney and CitiStreet to help you save for retirement.

COMING MAY 1: Lifecycle 2050 Fund

A new Lifecycle Fund for the long-term investor

The Lifecycle 2050 Fund is designed for younger participants who are in the early part of their careers. The Fund's objective is to build value during the early years and to protect that value as you near retirement.
For many, the idea of choosing investments for their retirement plan is overwhelming. That's why PSR offers Lifecycle Funds -- a simple solution to investing. Participants simply choose the fund that matches their expected date to retire, or to begin making withdrawals. The Funds do the rest.
Funds are designed to provide a diversified mix of stocks, bonds, and cash
Funds are rebalanced quarterly
Investment mix of each Fund adjusts to become more conservative over time

With Lifecycle Funds you can also avoid some common investing mistakes, including:
Owning the same investment in different funds
Owning one fund in a single asset class
Owning multiple funds, but all in the same asset class
If you're looking for a hands-off approach to investing, then a Lifecycle Fund may be for you. For more information, go to http://myGApsr.csplans and select Plan Investments. You can change your investments or transfer existing balances from the My Accounts section. You may also make changes to investments by calling the PSR Information Line.

FREE Informational Investment Seminars
To help you better prepare for retirement and understand the benefits of the Plan, CitiStreet offers a series of investment-related seminars. Descriptions of these free seminars are listed below:
1 Plan Overview covers the benefits and features of the Plan, and a brief overview of the Plan's investment options.
2 Investing 101 strengthens your investment decision-making abilities by increasing your understanding of: basic terminology, asset classes, the investment process, and getting started.
3 Asset Allocation offers a review of the Plan's investment choices and ways to improve diversification. Concepts such as asset allocation, risk and return, and different types of investment strategies are covered.
Take control of your future today and speak with your personnel department about scheduling a free seminar at your agency. Seminars provide a great opportunity for you to meet with your dedicated Plan Consultants who can help you answer questions about your account and use the Plan to your best advantage!
For State employees who are covered by the ERS Pension Plan, financial planning, pre-retirement, and WRAP (Workshop for Retirement Application Processing) seminars are also available. For more information and a schedule, go to the Plan's web site or to www.ersga.org and select Seminars.

in this issue
Plan News Riding Out a Volatile Market The Power to Move Markets Retiree Corner Test Your Knowledge of Stock Market Indexes 4 Ways to Make the Most of Your Tax Refund
Do you have unused vacation time?
If you retire or leave state employment, you can defer all or a portion of your unused annual leave into your 457 or 401(k) Plan (or both). And, just like your ongoing contributions to PSR, you won't pay taxes on the money until you withdraw it. Go online to download an Annual Leave Agreement. If you have more questions about deferring your leave, call 1-866-694-2777 and press 2 to speak with a Plan Consultant. You and your agency payroll or personnel officer must complete the form. A 10% early withdrawal penalty may apply for distributions taken from your 401(k) Plan before age 59.
866.694.2777 http://myGApsr.csplans.com

Riding Out a Volatile Market
A downturn in the stock market may make it difficult to stay focused on the future. When the market is on a roller coaster, many people suffer from "statement shock" in response to daily market changes.

It's natural to want to take measures to protect your portfolio, but that's when the best strategy is probably to sit tight. When you consider investing for the long term typically means for a period of 10 or more years, then a sharp decline in prices (a market correction) becomes less significant. So, the best way to weather a volatile market is to ride it out.
If you compare stocks to other investments, you'll see that, historically, stocks perform much better in the long run.* Whatever the future holds, the following strategies make sense:
Know your risk tolerance: Evaluate your comfort level with the rise and
fall of the market and invest accordingly.
Make sure your investments are diversified.
When the market declines, don't obsess about your losses.
Review your portfolio: Review how your portfolio value has
grown and changed over time -- look at the last two to 10 years -- it helps put market downturns into perspective.
Think before you make changes: Don't respond emotionally to a volatile
market.
Take your time when making investment decisions -- don't make moves based on what the market did yesterday or last week.
Stick to your plan: Stay in the market. Chances are you'll
do better over the long term than those who make sudden moves.

You Can't Predict the Future
Market corrections are nearly impossible to forecast and you can't do much to avoid them. History may repeat itself, but last week's market return is no sure-fire predictor of what will happen next. It's not wise to invest or decide not to invest because you expect some particular behavior from the market in the near future. When you try, you're as likely to miss out on gains as to avoid losses. In fact, investors who expect a correction and get out of the market have a harder time deciding when to get back in, and they often miss out on six months or more of positive investment results.
What's important is investing for the long term. If you keep your portfolio mix fairly constant, avoid selling, and continue to invest, you can be prepared for a correction -- and stand ready for the next upturn.

* Historical results are not a guarantee of future performance. ** Wikipedia, 2008

did you know?
Many investors who got out of the market after September 11, 2001 and stayed out too long missed out on the next market recovery. By year-end 2001, a little more than three months after the decline, the Dow had already recovered 21%.**
?

FIRST QUARTER 2008

retiree corner

The Power to Move Markets
Understanding Economic Indicators
An economic indicator is any statistic that "indicates" how the economy is performing today and how it may be trending for the future. Economic indicators have the power to move financial markets and directly affect interest rates. The more you know about them, the more confident you can become as an investor.
Here's a list of some of the more prominent economic indicators:
Consumer Confidence Index (CCI): Used by the Federal Reserve when setting interest rates.
Consumer Price Index (CPI): Important indicator of inflation.
Gross Domestic Product (GDP): Indicates the pace at which an economy is growing.
Employment Situation Summary: Monitors the rate of unemployment.
Housing Starts: Tracks the number of new single-family homes built during a given month.
Retail Sales Index: Tracks merchandise sold by companies ranging from Wal-Mart to the neighborhood grocery.
The indicators discussed above only scratch the surface of the type of economic data that is published regularly. For more information, go to the Resource Center on the top menu bar of your plan Web site and select "Featured Content".

If you're at that stage in your career where you're beginning to consider retirement or you are retired, you're probably beginning to weigh your options. You can keep your money in the
Plan and continue to take advantage of all the features and benefits that being a member of a large group plan offers. You must begin taking distributions at age 70, unless you are working. As you near retirement, it's also important to make sure your allocations are adjusted appropriately.
So before "taking it all with you," consider all you'd be leaving behind.
Call your Plan Information Line today to speak with a Plan Representative who can help make sure you are on track to reach your goals as you approach retirement.

Test Your Knowledge of Stock Market Indexes
Market indexes can help you track your portfolio's performance. What do they really mean?

CustomSolutions FROM SMARTMONEY

1

2TAhB.Ce.T3T.sAArBuDhAaa.Cl.cvewconTT.hTekAirwdBaShWrnrsao.aCaay.tedcbuD3sacsJag.Akuoot0ktsNoAenIfsnhdnsnBsosmfdoAtea5dcoeaMl5rfatl0toSilysuop0hmtentr0mDwenea0dhedlIaerarnAdnsemtsnfralD&rtdeedaoQekadmotoddorursheteWPgcmnuwisCatiebrkvoelntrsaoaetpsyiorks.Jncslnmrio1-aoetrtoa9odMcoonem'twmps7lxee'fces0atyxoAenh5ssphorelseaefnva0taecfIsoiv.dsnreoont0.2rRgeerdlmay,boretu0aIunahynIgssps0gnslttesydaaS0etoldecreletn...ssctliesoaaltxtiaekmxeonmo2d...rlss0cndci,Iai.pnkn0ksaailagln...s0drtmnd.iccesvIoilxnate&uem.ordsdktPce,pioekoxnat,otgnhwaryms'esh.saaitcnowhychtkrosa.lcek.s

answers
1. A. The Dow Jones Industrial Average (often called the Dow), created in 1896, tracks the share prices of 30 leading domestic companies. The makeup of the index has changed greatly over the years, as yesterday's industry leaders have given way to modern giants like Wal-Mart. If you own a blue chip fund, you may want to follow the Dow's performance.
2. B. The S&P 500 Index tracks the share prices of 500 large companies. It was created in 1957. While the Dow focuses on 30 well-established ("blue chip") companies, the S&P 500 tracks a wider range of firms and is a more comprehensive gauge of the stock market's performance of large companies.
3. A. The NASDAQ composite index mirrors the performance of the National Association of Securities Dealers Automated Quotations system. This electronic stock exchange was created in 1971 and includes shares of more than 3,000 growth-oriented companies, most of them technology firms. Because of its concentration in technology stocks, the NASDAQ tends to be more volatile than the Dow or the S&P 500.

Not intended to provide tax or investment advice.

CustomSolutions FROM SMARTMONEY

4 Ways to Make the Most of Your Tax Refund

Seven out of 10 tax filers will receive a refund this year, and, according to the Internal Revenue Service, the average refund last year was more than $2,000. Used wisely, that kind of cash can make a big difference in your financial future. If you are among those due a check from Uncle Sam, consider these four suggestions on how to make the most of your money.

Your 2008 Tax Rebate
Eligible taxpayers who have filed their 2007 Federal tax return will begin receiving a special tax rebate in early May. This includes 117 million middle- and low-income taxpayers, some 20 million retirees living on Social Security, and about 250,000 U.S. veterans receiving disability benefits. To receive a rebate you must file a 2007 return. For detailed information about rebate amounts, go to www.irs.gov.
$

1 Pay it down
"Paying down high-interest debt is the best way for most people to spend their tax refunds," says David Little, a chartered financial analyst, or CFA, in Fullerton, Calif. "It's a guaranteed high-return investment." For example, say you have a $5,000 balance on a card charging 13% per year. Pay just the monthly minimum and you won't eliminate that debt for about 12 years, after paying more than $2,500 in interest. Sinking $2,000 into the debt will slash more than two years and a total of $1,000 off your payments.
2 Pay up
If you don't have credit card debt, you may want to make an extra mortgage payment. You'll decrease the amount of interest you'll pay over the life of your loan. Say you have a $200,000, 30-year mortgage that requires a monthly payment of $1,200. One extra payment per year will save you $50,000 in total interest over the life of the loan -- and you'll own the home outright five years sooner. Tap the mortgage calculator at www.bankrate.com to figure out how much money an extra mortgage payment will save you.

3 Do it for the children
Consider opening a 529 College Savings Plan to get a head start on your children's future college costs. Invest the money now, and when you pay for college-related expenses, withdrawals are entirely tax-free. Each state has its own plan, and you may invest through any of them. Your own state's 529 may offer state-tax benefits, but costs, investment options, and other features vary widely, so it pays to do some research first at Web sites such as www.savingforcollege.com.
4 Be selfish
Lastly, getting a big refund means you gave the government an interest-free loan for the past year. Consider decreasing the tax withheld from your paycheck and shifting that money into your retirement plan. Saving an extra $2,000 every year would boost your nest egg by nearly a quarter-million dollars in 30 years, assuming your investments averaged an 8% annual return. Tax refunds can feel like found money, but the fact is you've worked hard to earn that cash. Make sure it works equally hard for you.

You owe, now what?
While most taxpayers receive refunds, others aren't so lucky. Here's what you can do if you're socked with a tax bill you can't pay by mid-April:

File IRS Form 9465. This form, available at www.irs.gov, allows you to pay your tax debt in monthly installments. You can name a payment size that works for you, as long as it puts you on track to have the debt paid off in five years or less. You'll be charged a $43 fee, as well as a variable interest rate of three percentage points higher than the federal short-term rate.

Take out a loan. A home equity loan or line of credit usually is the least expensive way for consumers to borrow money. It can provide the cash you need to pay Uncle Sam -- and the interest on the loan may be tax-deductible.

Plan Information Line: 1.866.MY.GA.PSR (1.866.694.2777)
Plan Web site: http://myGApsr.csplans.com
Field Office: Two Northside 75, Suite 300 Atlanta, GA Available MondayFriday 8:30 a.m.5 p.m.

In-state Plan Consultants:

*

Richard Crippen, Plan Manager

Kadir Edghill

Kadrina Jackson

Melanie Matabhik

This newsletter is not intended to provide legal, tax, or investment advice. For such advice, participants should contact their legal, tax, or investment advisors.

2008 CitiStreet, LLC. All Rights Reserved.

quarterly calendar
The New York Stock Exchange is closed on the following days: Monday, May 26, 2008 Friday, July 4, 2008 Transactions made on these days will be processed the following business day.
SKU#GAQ108