2003 03 March

Pensions & Investments carried a major story in its March 3 issue (page 3) on the continuing trend among pension funds towards Operational Reviews, aka "fiduciary audits."

FundFire.com, the on-line journal regarding institutional investing, recently previewed consultants' expectations for 2003, including those of IFS. "Managers to See Change in '03" was reported in the December 24 edition.

The Governmental Pension Fund of Thailand - with assets of approximately $4 billion (U.S.) and over 1 million members - is the country's largest retirement system and represents roughly 10% of the value of the entire Stock Exchange of Thailand. Seeking to institute "global best practices" at its own organization as well as influence the country's larger financial services sector, the Fund's Board and upper management convened a conference on "World Class Fiduciary Practices" in September 2002.

IFS has hired on a full-time basis two other senior personnel who had previously worked on a part-time basis.

Steven Harding - a CPA and formerly Internal Auditor for the New York State Comptroller's oversight of the New York Common Retirement Fund - will continue concentrating on the firm's Operational Review work.

IFS hired a new junior analyst in its Washington, D.C. office. Stacy Sullivan comes to us from Cambridge Associates where she has been responsible for performance measurement and portfolio analysis for approximately two years.

During the first quarter of 2003, IFS completed its Operational Review of the investment program of the Apogent Retirement Security Plan. Apogent is a publicly-traded company, based in Portsmouth New Hampshire.

In March 2003, IFS completed and presented its full-blown Operational Review of the investment program and practices of the $11 billion Alaska State Pension Investment Board.

In late 2000, after months of study, IFS recommended to the Iowa Governor's Task Force on Structure and Governance significant changes to the Iowa Public Employees' Retirement System, including establishing it as an entity distinct from the State's Department of Personnel. In December 2002, Iowa's Governor Vilsack announced the selection of the System's first executive director, replacing the Department of Personnel's Director as the System's chief executive.

In December 2002, IFS presented its final report to the Board of Trustees of the New Hampshire Retirement System regarding various aspects of that System's day-to-day operations and investment program. This Operational Review examined 12 different task areas. We compared the New Hampshire System's investment practices, policies, staffing and internal controls to "best practices" and recommended many specific adjustments, designed to facilitate its operating processes, enhance risk management and improve the organization.

In March 2003, the Pennsylvania Public School Employees Retirement System and the Pennsylvania State Employees Retirement System - with combined assets approximating $50 billion - selected IFS to evaluate their respective investment programs and practices. The two projects will proceed in tandem and are expected to be completed in early 2004.