Assets owned by the State Retirement and Pension System of Maryland gained 1.56 percent in value for the six months ended Dec. 31 -- not a bad result during a tumultuous period, a new report shows. Give credit to bonds and international stocks, which offset declines in U.S. stocks and real estate. The fund, which finances retirement income for teachers, police and other public employees, is more diversified than it used to be. That reduces the chances of the kind of multibillion-dollar declines that roiled the system in the early 2000s.

Standard & Poor's index of 500 big U.S. stocks delivered a return of negative 2.7 percent for the period. The pension system beat the S&P 500 because it's less exposed to it and U.S. stocks generally than it used to be. Seven years ago, U.S. stocks made up 48 percent of the portfolio. Now they're only 41 percent.

In 2000 the system's assets were 21 percent international stocks; now they're 23 percent. Foreign stocks have done much better than American stocks recently because, for the most part, overseas economies are still growing quickly and have avoided a U.S.-style housing collapse. In 2000 bonds and other fixed-income investments made up 24 percent of the pension system's portfolio, thanks to the 1990s bull market in stocks, which made the bond position proportionally smaller. Now the portfolio is 30 percent bonds, which are far less volatile than stocks.

The system does have, however, a 5 percent position in real estate and real-estate-related investments. That's up from 3.8 percent in 2000, and real estate did not have a good 2007. The system runs on the state fiscal year, which ends June 30. For the year ending June 30 2006, the fund gained 17.6 percent, helped by U.S. and foreign stocks alike. If the markets behave for the next six months as they did for the last six, this could be the fund's lowest-return fiscal year since FY 2003, when it gained 3.2 percent. (It lost 17 percent in 2001 and 2002.) Total assets on Dec. 31 were $39.5 billion. Still, no reason for alarm. A quick glance suggests the fund is in good shape.