REPORT DIGEST

 

ILLINOIS STATE

BOARD OF

INVESTMENT

 

FINANCIAL AUDIT

For the Year Ended:

June 30, 2008

 

Release Date:

January 15, 2009

 

 

 

 

 

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 TTY (888) 261-2887

 

This Report Digest and the Full Report are also available on

the worldwide web at

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

INTRODUCTION

 

      This digest covers our audit of the Illinois State Board of Investment financial statements for the year ended June 30, 2008.  A report on the results of our compliance attestation examination for the year ending June 30, 2008 is being issued separately.

 

     Pursuant to the Illinois Pension Code, the Illinois State Board of Investment (Board) manages the investments of the State Employees’ Retirement System, General Assembly Retirement System and the Judges’ Retirement System.

 

MEMBER SYSTEMS WITHDRAWALS

   

     During fiscal year 2008 the member systems’ withdrawals from the Board decreased $142.5 million from $642 million during fiscal year 2007 to $499.5 million during fiscal year 2008.  Total member systems’ net contributions (withdrawals) since inception of the Illinois State Board of Investment total approximately ($1.4 billion).

 

SUBSEQUENT EVENT

 

     Subsequent to the Board’s June 30, 2008 fiscal year end the investment portfolio experienced a significant decline due to unprecedented unfavorable market conditions.  Based on unaudited information provided by the Board, the investment portfolio declined approximately $2.1 billion from the June 30, 2008 balances based on the readily determinable market values provided by Board.

 

AUDITORS' OPINION

 

      Our auditors state the June 30, 2008 financial statements of the Illinois State Board of Investment are fairly presented. 

 

 

 

                                   ____________________________________

WILLIAM G. HOLLAND, Auditor General

WGH:RPU:pp

 

SPECIAL ASSISTANT AUDITORS

 

      Our special assistant auditors for this audit were McGladrey & Pullen LLP.

 

{Financial data is summarized on the reverse page}

 

 

 

 

ILLINOIS STATE BOARD OF INVESTMENT

FINANCIAL AUDIT

FOR THE YEAR ENDED JUNE 30, 2008

 

OPERATING STATEMENT ANALYSIS

FY 2008

FY 2007

Revenues: Investment Income–Increase/(Decrease) in Fair Value

                Investment Income - Interest & Dividends................

                Investment Income - Securities Lending...............

                    Total Investment Income/(Loss).......................

Expenses: Salaries and Benefits...........................................

                Operating Expenses............................................

External Support (consulting and investment fees).

                    Total Expenses...............................................

 Revenue Over / (Under) Expenses..............

Member Systems’ Withdrawals...........................................

Net Assets Beginning of the Year........................................

Net Assets End of the Year.................................................

  $ (1,029,242,365)       316,825,531

16,624,470

$   (695,792,364) $1,422,254
567,688

       39,860,694

$       41,850,636

$   (737,643,000) (499,500,000)

12,552,196,161

$11,315,053,161

  $  1,594,268,87  

319,512,311

        4,493,459 

$ 1,918,274,641

$        1,277,024 

448,056

 38,838,254

$      40,563,334 

$ 1,877,711,307

(642,000,000)

11,316,484,854

$12,552,196,161

EXTERNAL SUPPORT EXPENSES

FY 2008

FY 2007

Custody..................................................................................

Consulting and Professional.....................................................

Investment Advisors / Managers..............................................

Investment Services and Research...........................................

         Total External Support Expenses.....................................

$     212,604
1,471,182

38,008,970

     167,938 $39,860,694

$     239,800

1,133,726

37,297,370

 167,358

$38,838,254

MEMBER SYSTEMS’ WITHDRAWALS

FY 2008

FY 2007

State Employees’ Retirement System...................................

Judges’ Retirement System................................................

General Assembly Retirement System................................

Total Member Systems’ Withdrawals.........................

$462,000,000

30,400,000

    7,100,000   

$499,500,000

$612,000,000

22,000,000

    8,000,000

$642,000,000

INVESTMENT PORTFOLIO ANALYSIS - Fair Value

JUNE 30, 2008

JUNE 30, 2007

Government and Agency Obligations..........................................

Foreign Obligations.................................................................

Corporate Obligations................................................................

Common Stock & Equity Funds.................................................

Preferred Stock (Domestic & Foreign).......................................

Foreign Equity Securities...........................................................

Hedge Funds............................................................................

Real Estate Investments............................................................

Private Equity...........................................................................

Money Market Instruments......................................................

Infrastructure Funds..................................................................

Bank Loans..............................................................................

Forward Foreign Exchange Contracts.......................................

Total Investment Portfolio.................................................

$     852,045,701

113,005,430

1,058,164,332

4,241,685,933

5,094,532               1,984,314,463

598,985,402

1,332,081,349

524,628,589

307,481,504

209,975,518

202,137,983

         (72,622)

$11,429,528,114

$ 1,184,275,884

72,189,687

1,228,970,012

6,059,409,027

1,865,020 

1,365,647,941

496,404,578

1,189,614,911

563,366,021

535,699,912

108,436,449

0

         (108,696) 

$12,805,770,746

SELECTED ACCOUNT BALANCES

JUNE 30, 2008

JUNE 30, 2007

Cash......................................................................................

Total Accounts Receivable......................................................

Prepaid Expenses..................................................................

Capital Assets........................................................................

Operating Expenses Payable...................................................

Investment Purchases Payable................................................

$  43,667,005 

$187,106,001

$        16,242 

$        52,797

$    7,101,649                $338,215,349

$  42,916,419 

$548,269,714

$        14,740

$        49,283 

$    7,572,502 

$837,252,239

BOARD CHIEF EXECUTIVES

 

 

During Engagement Period: Executive Director: William R. Atwood. Chairman: Michael Goetz.

Currently:  Executive Director: William R. Atwood.  Chairman: Michael Goetz.