A Message from

Eric L. Holoman, Board President

Portfolio ends calendar year at new high - $11.1 billion

Looking back on 2007, I am amazed at what our Members and staff have accomplished. I would like to share with you some highlights of 2007 and what we have to look forward to in 2008. In January, the LACERS Board of Administration kicked off the year with an extensive self-evaluation and a review and update of our strategic plan. One specific goal in the strategic plan is to have an optimal portfolio that will meet our investment and actuarial objectives.

While the portfolio remains strong, we look to new investment strategies to safeguard us from a volatile stock market. In 2007, our real estate investments and entry into the distressed debt category were areas where growth was anticipated. In 2008, we will enhance our Corporate Governance portfolio and consider investment in infrastructure.

Along with advances in our portfolio, we will expand our website, www.LACERS.org. We will be working on other enhancements to make the website more user-friendly. We encourage you to visit our website throughout the year for updates about LACERS and the customer services that we have to offer. In 2008, we will host community meetings aimed specifically at our retired Members focusing on Medicare, Elder Law and Wellness.

Finally, I would like thank our General Manager, Robert Aguallo, Jr., as he approaches his retirement from LACERS. Robert has led LACERS vigorously and transformed it into a premier retirement system, fully prepared to take on the challenges of a new century and a dynamic political and investment climate. He leaves LACERS to pursue other opportunities in the financial world and to spend more time with his family.

We wish Robert all the best and we are certain he will be successful in the next chapter of his career.