March 1, 2006

The Board of Trustees of the Fire & Police Pension Fund, San Antonio is pleased to present our Annual Report for the fiscal year ending September 30, 2005.

Contained in this report you will find important financial and actuarial reports on the Fund. Fiscal year 2004-2005 was another remarkable year for investment returns. After returning 12.1% last year, the Fund followed that up with a strong return of 14.0%. The market value of assets increased over $213 million during the year, from $1.493 billion to $1.706 billion.

In addition, the Fund’s auditor gave the Pension Fund an unqualified opinion stating the financial statements fairly presented the net assets of the Fund and were in conformity with generally accepted accounting principles. No exceptions were noted.

Finally, I would like to end this report by thanking the Board of Trustees and staff for their hard work in ensuring that pension participants, retirees and beneficiaries have a financially and actuarially sound retirement system. It is with this effort that we are able to achieve the Fund’s mission statement: “Dedicated to providing retirement security for Fire Fighters and Police Officers – past, present and future.”




March 1, 2006

The Board of Trustees and staff of the San Antonio Fire and Police Pension Fund are pleased to present our 2005 Annual Report.


We would like to report to you, the membership, that 2005 was a banner year for your pension fund. The Fund achieved a 14.0% investment return and is currently 88% funded. For comparative purposes, in fiscal year 2004, we earned 12.1% and were 84% funded. The investment objective of the Fund has always been to seek the greatest return consistent with the fiduciary character of the Fund and to allow the Fund to meet benefit disbursements as they arise. As of September 30, 2005, the market value is $1.707 billion, and is invested across many asset classes. These asset classes range from equities (domestic, international and emerging markets), fixed income (domestic, international and global), real estate, private equity and hedge funds. This broad diversification among asset classes supports the Fund’s long-term objective of capital preservation and consistent capital appreciation over a full market cycle.

Regarding the membership of the Fund, it is interesting to note that the active participants declined during the year from 3,427 to 3,395 members. Conversely, and as expected, the number of retired participants and beneficiaries increased form 1,696 to 1,764. As you can see in the Actuarial Valuation Report, the number of new retirements has remained fairly steady over the past couple of years. However, we believe the effect is temporary and expect the number of new retirees to increase dramatically over the next decade. Your Board of Trustees will continue to monitor this demographic trend and make decisions that take this into consideration.

In closing, I would like to thank the Board of Trustees for its ongoing efforts to strengthen the San Antonio Fire and Police Pension Fund for future generations of firemen and policemen. Their commitment to the Fund is unwavering. Finally, on behalf of the staff, I would like to thank the Board and membership for their strong support during the past year. We look forward to serving you in the years ahead.



Executive Director and
Chief Investment Officer