News: 2005 3rd Quarter

This VEBA was formed through collective bargaining between the Company and the Steelworkers Union to provide retiree medical health benefits. The Company expects to emerge shortly from Chapter 11 and to fund the VEBA with a contribution of newly-issued common stock. The VEBA retained IFS to serve in several interrelated capacities:

• To act-as an independent fiduciary-- on behalf of the VEBA regarding the Company's application to the U.S. Department of Labor for a prohibited transaction exemption, to permit the proposed contribution of Kaiser stock to the VEBA
• To serve on an ongoing basis as an investment manager for the VEBA, responsible for managing and disposing of the stock over time, as may be prudent, as well as exercising the associated proxy rights (assuming the stock is in fact contributed)
• To advise the Board of Trustees regarding investment of cash which the Company also has contributed to the VEBA

• Employees' Retirement System of the City of Milwaukee
  Milwaukee ERS hired IFS to conduct a comprehensive Operational Review of their investment programs and practices. IFS is evaluating many aspects of the investment programs, compared to industry best practices, including, for example, the Fund's investment processes and policies concerning asset allocation, operations and administration, board oversight, staffing and resources and other matters.
• School Employees Retirement System of Ohio
  Ohio SERS hired IFS to evaluate the adequacy of compliance by its private asset managers with applicable investment guidelines. The System also asked us to assist in implementing IFS' prior recommendations regarding disclosure by the System's investment consultant.

IFS recently began several fiduciary transactional assignments and other projects:

• Hibernia National Bank Employee Stock Ownership Plan and Retirement Security Plan
  Hibernia, a publicly traded bank based in New Orleans, received an acquisition offer from Capital One Finance. Two Hibernia benefit plans own Hibernia stock. As an independent fiduciary for the Plans, IFS previously decided in favor of the merger with Capital One, but following Hurricane Katrina, the initial merger transaction was derailed. Thereafter, the Company and Capital One agreed to amend the merger agreement. The Plans rehired IFS as an independent fiduciary to re-evaluate the proposed merger, and to instruct the Plans' trustee how to vote the proxies associated with participant shares. Assuming the transaction proceeds, IFS will also be responsible for instructing the trustee regarding whether and to what extent to seek merger consideration in the form of cash or Capital One stock.
• New York State Laborers - Employers' Cooperations and Education Trust Fund
  The Fund hired IFS to review, evaluate and report on its investments. IFS is to recommend possible changes to the Fund's asset allocation, investment policy statement and investment managers.

IFS recently completed its comprehensive Operational Review for the Middlesex Retirement System in Massachusetts.

IFS recently completed its evaluation of this 401k Plan's current investment policy statement and procedures regarding company stock as an investment option. Enhancements were recommended relating to both the Committee's processes and criteria for monitoring the continuing suitability of offering company stock as an investment option, as well as the Committee's communications to participants regarding that option.

Acting as an independent fiduciary, IFS recently determined on behalf of this 401k Plan whether to accept a proposed settlement of an ERISA class action regarding losses the Plan suffered on WorldCom stock.

Acting as an independent fiduciary, IFS recently determined on behalf of this K Plan whether to accept a proposed settlement of ERISA claims against the company. Those ERISA claims grew out of the same events that generated a securities class action against Dynergy, which was recently settled.

The bank hired IFS to act as an independent fiduciary on behalf of ERISA plan investors in certain mutual funds that the bank sponsors and its investment management affiliate manages. Acting on behalf of the ERISA investors, IFS determined whether to approve various fees the mutual funds proposed to pay to the affiliated manager.

IFS recently completed its evaluation of the proposed merger and instructed the Plans' trustee how to vote the proxies associated with participant shares. However, due to Hurricane Katrina the proposed merger was amended and IFS was re-hired to evaluate the amended proposal.

This article (pg 71-72) titled "Still on the hook - the run-up in fiduciary liability insurance premiums has slowed, but that doesn't mean that 401(k) litigation has cooled off", cites Independent Fiduciary Services, Inc. as one of the better known consulting companies in the industry.

In the article (pg 27) titled "Louisiana law puts disclosure onus on firms", Samuel W. "Skip" Halpern, executive vice president, Independent Fiduciary Services, Inc., Washington said, "The overall thrust of the [Louisiana] legislation is healthy from a public policy perspective. The statute is well aimed at focusing on revenue from other than pension sponsor sources, and I take that to mean revenue from helping money managers in their proprietary business. It's a good provision insofar as it refers to revenue in both hard and soft dollars," Mr. Halpern said. "The law has a presumption that the failure to disclose causes damage. From the standpoint of good governance, that is a good presumption."

In a Letter to the Editor, Samuel Halpern, Executive Vice President of Independent Fiduciary Services, discusses the differences between an Operational Review (or as the industry often calls them, "investment fiduciary audits" or "performance management audits") and a "forensic audit." The Operational Review typically is geared to producing forward-looking, concrete recommendations designed to enhance the pension fund's policies, procedures and practices. By contrast, a "forensic audit" is more oriented toward civil or even criminal legal proceedings.

Ed Patchett of IFS recently authored an article on alternative investments.

Excerpt: "Alternative investments are complex and often present unique investment and fiduciary risks for trustees. This article provides a brief overview of the alternative investments class and highlights some key investment characteristics and risks associated with alternative investments."