REPORT DIGEST

 

ILLINOIS STATE BOARD OF INVESTMENT

 

COMPLIANCE AUDIT

For the Year Ended:

June 30, 2003

 

Summary of Findings:

 

Total this audit                      0

Total last audit                      0

Repeated from last audit       0

 

Release Date:

March 11, 2004

 

 

 

 

 

 

 

 

 

State of Illinois

Office of the Auditor General

WILLIAM G. HOLLAND

AUDITOR GENERAL

 

 

 

 

 

 

To obtain a copy of the Report contact:

Office of the Auditor General

Iles Park Plaza

740 E. Ash Street

Springfield, IL 62703

(217) 782-6046 or TDD (217) 524-4646

 

 

This Report Digest is also available on

the worldwide web at

http://www.state.il.us/auditor

 

 

INTRODUCTION

This digest covers our compliance audit of the Illinois State Board of Investments (Board) for the year ended June 30, 2003. A financial audit covering the year ending June 30, 2003 was issued separately.

There were no material findings of noncompliance disclosed during our audit tests. We commend the Board for maintaining effective fiscal controls.

 

SUBSEQUENT EVENT

On April 7, 2003, Governor Rod Blagojevich signed House Bill 2660 into law as Public Act 93-0002. This new law authorized the State of Illinois to issue $10 billion of General Obligation Bonds for the purpose of making contributions to designated retirement systems, which included the State Employees Retirement System, General Assembly Retirement System, and the Judges Retirement System.

On July 2, 2003, the Board received an allocation of $1,554,924,744 from the respective retirement systems resulting from the pension bond proceeds. The Board approved a temporary allocation of the pension obligation bond proceeds as follows: 54% to a Russell 3000 Index Fund, 31% to a Lehman Brother Aggregate Index Fund, 15% to a EAFE Index Fund.

 

____________________________________

WILLIAM G. HOLLAND, Auditor General

WGH:RPU:pp

SPECIAL ASSISTANT AUDITORS

KPMG, LLP were our special assistant auditors for this audit.

{Financial Information is summarized on the reverse page.}

 

 

                ILLINOIS STATE BOARD OF INVESTMENT

INFORMATION FROM FINANCIAL AND COMPLIANCE AUDITS

                           YEAR ENDED JUNE 30, 2003

 

FINANCIAL STATEMENT ANALYSIS

FY 2003

FY 2002

Revenues:

       Investment Income - Interest

       Investment Income - Dividends

       Investment Income - Securities Lending

              Total Investment Income

Expenses:

              Operating Expenses #9;

Net Investment Income

Realized Gain (Loss) on Investments

Unrealized Gain (Loss) on Investments

              Change in Investments

Member Systems’ Withdrawals

Net Assets, at Beginning of Year

Net Assets, at End of Year

 

$ 118,115,302

68,679,534

1,931,644

$ 188,726,480

 

16,756,528

$ 171,969,952

(608,949,507)

449,672,264

$ 12,692,709

(140,000,000)

7,928,328,501

$7,801,021,210

 

$ 165,057,208

48,392,308

2,279,015

$ 215,728,531

 

18,604,615

$ 197,123,916

(209,162,950)

(565,864,432)

$ (577,903,466)

(71,850,000)

8,578,081,967

$7,928,328,501

INVESTMENT PORTFOLIO ANALYSIS – Fair Value

JUNE 30, 2003

JUNE 30, 2002

Total Government Obligations

Total Corporate Obligations

Foreign Obligations

Convertible Bonds

Common Stock & Equities

Convertible Preferred Stock

Preferred Stock

Foreign Equity Securities

Real Estate Investments

Alternative Investments

Money Market Investments

Forward Foreign Currency Contracts

              Total Investment Portfolio

$ 862,128,328

695,789,042

181,133,769

861,871

3,772,803,315

4,263

4,402,445

1,174,665,480

614,846,458

441,537,163

283,727,618

(17,720)

$8,031,882,032

$1,057,628,472

807,243,888

84,261,722

159,060

3,573,004,993

75,520

8,051

1,231,600,202

417,054,183

414,830,358

345,095,683

511,922 $7,931,474,054

OPERATING EXPENSES

FY 2003

FY 2002

Salaries

Benefits

Rent and Utilities

Audit

Other

External Support:

       Custody

       Consulting and Professional

       Investment Advisors/Managers

       Investment Services and Research

              Total Operating Expenses

$ 1,003,424

280,235

147,239

93,200

115,974

 

357,750

334,708

14,202,759

221,239

$16,756,528

$ 1,162,229

325,957

127,535

90,010

118,688

 

358,068

357,771

15,888,360

175,997

$18,604,615

SUPPLEMENTARY INFORMATION

FY 2003

FY 2002

Compounded Annual Rate of Return, Since July 1, 1982 (unaudited)

Annual Time Weighted Return on Investments (unaudited)

Average Number of System Employees

Total Brokerage Commissions Paid

Total Investment Manager Fees

10.5%

.3%

8

$8,174,036

$14,202,759

11.1%

(6.9)%

12

$4,381,910

$15,888,360

EXECUTIVE DIRECTOR(S)

During Audit Period: Jane R. Patterson, until February 28, 2003; Katherine Spinato, Acting, March 1, 2003 through March 15, 2003; William R. Atwood , effective March 16, 2003

Currently: William R. Atwood