News: 2004 2nd Quarter

Local 804 I.B.T. and Local 447 I.A.M. - UPS, Inc. Multi-Employer Retirement Plan

IFS has been hired to provide investment advisory services on an ongoing basis.

• Ohio Retirement Study Council
  The Ohio Retirement Study council hired IFS to conduct fiduciary audits of the $52.9 billion State Teachers Retirement System and the $9.1 billion Ohio Police & Fire Pension Fund.
• The California State Teacher Retirement System
  CalSTRS selected IFS for its pool of specialty consultants that performs project work for the System.
• Middlesex Retirement System
  IFS was hired to perform a complete Operational Review for the Middlesex (Massachusetts) Retirement System.
• Virginia Housing Development Authority
  IFS was hired to perform an Operational Review for the Authority.
• San Antonio City Public Service Employee' Benefit Trust
  IFS recently completed an Governance Review for this Plan.

• IFS served as the independent fiduciary on behalf of investors in this Fund. IFS decided whether and on what terms the Fund should sell to its affiliated Strategic Property Fund an interest in a valuable piece of real estate in Los Angeles.
• IFS was hired to evaluate the investment merits of two alternative fixed income options in a defined contribution plan.
• IFS was hired to evaluate from the investment perspective of participants in a 401k Plan, the proposed liquidation of one of the mutual funds within the Plan. Because the plan sponsor operates the mutual fund, the situation created a conflict of interest requiring an independent fiduciary to act solely in the interest of the Plan's participants.

Ohio Retirement Study Council, Columbus, hired Independent Fiduciary Services to conduct fiduciary audits of the $52.9 billion State Teachers Retirement System and the $9.1 billion Ohio Police & Fire Pension Fund, said Aristotle Hutras, council director. Nine IFS consultants will conduct the audits, which should be finished by the end of the year. The other finalist was a combination of Mercer Human Resource Consulting and Mercer Investment Consulting, Mr. Hutras said.

"Outside fiduciaries sought" is the title of an article in the June 14, 2004 issue of Pensions & Investments. The article discusses conflicts of interest that can arise when a company has been sued for securities fraud and its 401k plan, which offers company stock as an investment option, is a member of the class in the securities fraud class action. Referring to a recent prohibited transaction exemption issued by the U.S. Department of Labor, the article quoted Samuel (Skip) Halpern as saying, "The concern that led a lot of plans to hire (us) are just now more explicit with that exemption than before it. When a plan releases a party in interest from legal liability for a fiduciary self-dealing transaction, then an independent fiduciary needs to be the decision-maker on behalf of the plan."

"Pension funds take a tough stance in consultant dealings" is the title of an article in the June 28, 2004 issue of Pensions & Investments. The article discusses how the SEC investigation of investment consultants and the related issue of "soft dollars" and financial arrangements between investment consultants and investment advisers and related disclosures have prompted some pension funds to hire independent firms to evaluate their consultants. Samuel (Skip) Halpern was quoted as saying, "Winds are strongly blowing in that direction and for good reason. Our firm asks consultants a lot of questions about revenue, ownership and operating structure."

Andrew Irving, SVP & Deputy General Counsel for IFS, has authored an article titled "New DOL Rules Require Independent Approval of Benefit Plan Settlements" that was published in the Spring, 2004 issue of the American Bar Association's Labor and Employment Law newsletter. The newsletter is distributed to the several thousand attorneys who belong to the ABA Section on Labor and Employment Law.

Ed Patchett presented a session on Alternative Investments at a meeting held in Tucson, AZ on April 19. In the session he reviewed the investment characteristics, structure and key risks of the three major types of alternative investments; private equity, hedge funds and managed futures / commodities. Among other things he pointed out that alternative investments are becoming more common investments for ERISA pension funds and can provide meaningful diversification to traditional asset classes. Ed also indicated this asset class requires a heightened level of investment and legal due-diligence.

Lamont (Monte) Tarbox presented an investment strategies course at the June AFL-CIO Center for working Capital seminar for trustees in Philadelphia, PA. Topics included were: How trustees should approach analyzing their current portfolio, Designing and monitoring an optimum portfolio, and Developing an investment policy statement.

Samuel (Skip) Halpern made a presentation on Fiduciary Audits - What to Expect at the conference held in Lake George from June 19-20, 2004.

"Employee Benefits as Institutional Investors: Coping with the Rising Tide of Corporate Malfeasance Claims" 

Andrew Irving, on June 17, 2004, discussed the array of investment issues plan fiduciaries must confront, the role of an independent fiduciary when a corporate plan has suffered investment losses on employer stock held by the pan and practical advise for the prudent institutional investment of plan assets.