2005 2nd Quarter

IFS recently started a comprehensive fiduciary review of the investment programs and practices of these two funds, with combined assets of approaching $80 billion.

IFS recently began several fiduciary transactional assignments and other projects:

IFS recently completed development of an operational protocol and a policy statement concerning the Fund’s securities class action monitoring processes.

FS completed its review of the Hospital Endowment’s relationship with its investment consultant and its brokerage practices.

Samuel (Skip) Halpern spoke at the recent conference of the International Foundation of Employee Benefit Plans on the topic of "Operational Reviews/Fiduciary Audits - What to Expect." He described the Operational Review as a best practices study of a pension fund's investment program and practices, the process and steps involved in conducting such a Review, the range of subjects that may be addressed, the reasons for conducting this type of evaluation, and the concrete benefits, including reduced investment and fiduciary risk, better cost control, and greater efficiencies.

The $52 billion Pennsylvania Public School Employees’ Retirement System and the $26.6 billion Pennsylvania State Employees’ Retirement System signed an agreement allowing state audits of the two funds’ investment performance. The agreement settles pending litigation.

Milwaukee City Employees’ Retirement System selected Independent Fiduciary Services as consultant to conduct a fiduciary audit and operational review, pending contract negotiations, according to Jennifer A. Shannon, CJO of the $4.3 billion fund. The audit will include examination of investment policy, manager search process and money manager fees, and a cost/benefit analysis of improvements.

Samuel W. “Skip” Halpern, executive vice president, Independent Fiduciary Services Inc., Washington: commented on recent legislation enacted in Louisiana concerning conflicts of interest in the investment consulting business. “The overall thrust of the legislation is healthy from a public perspective.

Pennsylvania’s two largest state pension funds will be subject to performance audits by state auditor general Jack Wagner. Washington-based consulting firm Independent Fiduciary Services (IFS) will conduct fiduciary reviews of the two funds in conjunction with the audits.

Samuel W. Halpern, executive vice president of Independent Fiduciary Services, Washington, recalled testifying before a working group of the ERISA Advisory council in the mid-1990’s that investment consultants should be regarded as fiduciaries. At that time he indicated, “And to the extent they are, they (consultants), should be subject to the self-dealing provisions of (ERISA) where they should not be paid by someone with an interest that is adverse to the plan.” He still maintains this view. Mr.