News: 2007 3rd Quarter

IFS has been appointed as an ongoing advisor to the 401(k) Administrative Committee of a global commercial real estate services firm. In this capacity, IFS continues to monitor the company's performance and provide advice to the Committee as to whether the company's stock remains an appropriate investment option for the firm's 401(k) pension plan participants.

Last year, as reported in the international press, a provincial retirement fund in Shanghai suffered a major scandal regarding abuse of its investment assets. That led the central government to consider legislation to enhance governance of the investment programs of provincial funds across the country. Through funding from the Asian Development Bank, IFS is advising the Legislative Affairs Office of the State Council of The People's Republic of China on those possible enhancements, drawing on comparative pension investment systems around the world.

The Board of Trustees hired IFS to perform a broad scope independent Operational Review that will review the $30 billion Systems' investment-related organizational structure, current investment program and service providers, internal controls and risk management as well as assess the Systems' ability to carry out investment-related functional activities effectively and efficiently.

IFS has been appointed to serve as independent fiduciary for the Solutia, Inc. Retiree Welfare Trust. This VEBA is being established to support Solutia's ongoing obligation to provide health and related benefits to retirees, including 20,000 pre-1997 retirees from Solutia's predecessor company Monsanto, now known as Pharmacia. Solutia is a global manufacturer of chemical-based materials for industrial and consumer use. The VEBA is expected to have $200 million in assets. IFS will evaluate and manage the stock of the reorganized company which the VEBA is to receive in satisfaction of retiree claims against the company in the bankruptcy proceeding. In addition, IFS will consider whether the VEBA should support an application by Solutia to the US Department of Labor for permission to accept Solutia stock in excess of statutory limits.

IFS was hired as a retainer consultant by the following funds to provide ongoing advice and recommendations regarding investment policy, asset allocation, investment manager search, risk controls and performance reporting and evaluation:

• Freight Drivers & Helpers Local 557 Pension Fund
• Freight Drivers & Helpers Local 557 Health & Welfare Fund
• Electrical Workers Local No. 26 Pension Trust Fund
• Local 8 IBEW Retirement Plan and Trust

James (Jim) Bungerz joined IFS in September 2007 as a Vice President in its Fiduciary Decisionmaking practice. He is based in the company's Newark, NJ office. Jim brings more than 15-years of investment management and research experience to IFS developed from both the buy-side and sell-side in the capital markets. Prior to joining the company, Jim managed a $9 billion fixed income portfolio for defined benefit and defined contribution pension plans and other institutional clients of Times Square Capital Management in New York City. Prior to joining TSCM, Jim served as a research analyst for Barclays Capital and PaineWebber, generating original research and investment recommendations across numerous industries and interfacing with global institutional clients. Jim also served as a Private Placement analyst for New York Life Insurance Company, conducting due diligence and negotiating the principal terms and covenants of varied investment transactions. Jim is also an experienced entrepreneur, having patented and marketed a new labeling system.

IFS completed an operational review of the defined benefit pension plan of a Fortune 500 diversified manufacturing company. As part of the assignment, IFS reviewed the plans'governance structure, investment policy, asset allocation, and investment performance. The project took just under three months to complete. A brief, high-level report was issued to the client.

IFS recently completed an Investment Review of the Ohio Operating Engineers Pension Fund. This strategic investment review of the Fund's investment program and practices outlined IFS' evaluation and recommendations to the Board of Trustees regarding investment policy statement, asset allocation & investment structure, alternative investments, investment consultant's services, investment manager guidelines, historical investment performance benchmarks, and investment-related costs and fees.

On September 20, 2007 Frank Lilly, Chairman and CEO of IFS presented comments and suggestions to the United States Department of Labor, 2007 ERISA Advisory Council Working Group on Fiduciary Responsibilities - Update and Revenue Sharing. His presentation suggested how the DOL could bring greater transparency to the participant directed 401K market to assist plan participants and plan sponsors in their decision-making. Lilly suggested standardizing terminology and reporting with respect to 401K plan fees, costs and services.

The General Accountability Office interviewed Skip Halpern, IFS President, as part of its research for its forthcoming report on fiduciary responsibilities for the named fiduciaries of 401k plans. While recent GAO reports have focused more specifically on particular subjects like employer stock and mutual fund fees in 401k plans, the upcoming report will extend more broadly across those and other aspects of fiduciary responsibility concerning 401k plan investment programs The expect the report sometime in the first quarter of 2008.

In September, Edward Patchett, Sr. Vice President, attended the 2007 NCCMP annual conference held in Westin Diplomat Hotel, West Hollywood, Florida.

Jennifer A. Cooper, CFA, CEBS joined IFS in September of 2007 as Vice President of Business Development. She brings to the firm 20 years of hands-on experience in the institutional investor community. Ms. Cooper began her professional career with the Houston Firemen's Relief and Retirement Fund where she served as Executive Director. She was responsible for the investment, administrative, legislative, actuarial, and public relations programs for a $1.6 billion retirement system. In 1996 she founded Cooper Consultants, an independent firm that provided niche consulting services to public and private defined benefit and defined contribution funds, endowments, non-profit organizations, and foundations. In 2002, Ms. Cooper closed Cooper Consultants to new business and founded the non-profit Global Renewal Foundation, where she served as CFO until May of 2007.

Meredith Davis joined IFS in September as an Executive Assistant, in our Washington D.C. office. Meredith was previously the Office Administrator for Cel-Sci Inc. Meredith is providing executive administrative support to various members of the IFS leadership team.

Joseph Stevens joined the firm in October 2007 as an analyst in our Washington, DC office. Joe was previously employed at T. Rowe Price as a Senior Associate in Trade Support.