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1. APPELLATE COURT LETS STAND FORT LAUDERDALE P&F "ME-TOO" RULING: Until 1994, the City of Fort Lauderdale Police and Firefighter's Retirement Plan contained the following provision: "Upon approval of the Board as regards any future amendment to this System any increases in retirement benefits granted to active employees after the Effective Date of this System shall also be made applicable to those retired since the Effective Date of this System, and their Beneficiaries." Affectionately referred to as the "Me-Too clause," the provision was repealed in 1994. At the request of a group of retirees, in 1998, the Board of Trustees made applicable to retirees who retired before the repeal increased benefits granted to active employees before the repeal. The City of Fort Lauderdale sought review of the Board's decision in the circuit court. By final judgment dated November 24, 1999, the court affirmed the Board's action, finding that "regardless of the terminology used, the City attempted to retroactively apply the repeal of the ‘additional benefits clause' to the retirees. These former employees were vested in those rights and they cannot be taken away by an after-the-fact application of an ordinance or contract that post-dates their retirement." The City sought further review, in the Fourth District Court of Appeal, but that court denied the City's petition for writ of certiorari on March 2, 2000. We represented the Board, our regular client, in the foregoing proceedings. City of Fort Lauderdale v. City of Fort Lauderdale Police and Firefighters' Retirement System , Case No. 98-018378 (Fla. 17th Cir., November 24, 1999), cert. den., City of Fort Lauderdale v. Board of Trustees of the City of Fort Lauderdale Police and Firefighters' Retirement System , Case No. 4D99-4373 (Fla. 4th DCA, March 2, 2000).

"How do you spell relief? R . E . T . I . R . E . M . E . N . T."

2. GOLDEN INVESTING RULES: In nearly 40 years on Wall Street, the late Louis Ehrenkrantz, dean of American stock pickers, was known for his ability to predict social and political developments -- and identify companies that would benefit most from those events. His first rule: develop a large appetite for reading; it will hone your instincts for finding successful companies. Second rule: don't overdiversify; ten stocks, in at least three sectors, are enough for the average investor. Third rule: stick with your winners and sell your losers; do not automatically sell when a stock hits a target price, but continue to hold it as long as it performs well and has good prospects for the future. Fourth rule: look for top-quality, out-of-favor companies; look for companies that produce an array of high-quality products and/or services. Fifth rule: don't worry about earnings if a company makes a popular product; strong earnings growth will follow. Sixth rule: don't tinker with your portfolio; check your portfolio's performance only once or twice a year. Last rule: don't be afraid to hold cash; it's okay to be prepared to purchase stocks with beaten-down prices after a correction. The great Ehrenkrantz's rules were published in a recent Bottom Line.

3. PROPOSED BUDGET SEEKS $169 MILLION FOR IRS TAX EXEMPT AND GOVERNMENTAL ENTITIES DIVISION: Of the $8.8 Billion requested by the President for the Internal Revenue Service Fiscal Year 2001 Budget, $169 Million is included for the Tax Exempt and Government Entities Division. The Division uses its budget to insure compliance with tax laws and the Employee Retirement Income Security Act by monitoring pension plans, exempt organizations and government entities. Replacing the former Employee Plans and Exempt Organizations Division, the Division also issues private letter rulings, determination letters and opinion letters. Meanwhile, the Pension Benefit Guaranty Corporation has requested $177 Million in Congressional appropriations for Fiscal Year 2001, an increase of about $12 Million. PBGC is the federal agency that insures about 42,000 single-employer plans (33 million participants) and 2,000 multi-employer plans (8.7 million participants). Most of the agency's funding comes from annual premiums paid by plan sponsors. Both of the foregoing reports appeared in Pension & Benefits Reporter.

4. IRRC STUDY CITES PUBLIC PLANS' "AWKWARD POSITION" ON TOBACCO INVESTMENTS: A new study released by the Investor Responsibility Research Center cites the "awkward position" of states and local governments whose pension plans continue to invest in the tobacco industry even as they seek to recover billions of dollars in smoking-related claims. Six states and ten large municipalities have set policies to restrict or divest tobacco stocks, but the majority of pension funds still hold tobacco stocks despite the industry's mounting legal problems. Nevertheless, the report says that calls for tobacco divestment are increasing in many state pension systems. The report cites several fiduciary issues that should be considered with respect to tobacco divestment. It provides examples of situations in which divestment would be permissible, situations that would require caution and circumstances in which divestment might run afoul of the law. A primary question is whether tobacco investments should be regarded as investments in any other legal product or whether they should be singled out for special treatment. Plans should also consider whether to use their influence as major stockholders to encourage reforms within the tobacco industry as an alternative to divesting. It is permissible, according to the report, for plan fiduciaries to invest in tobacco-screened funds if they determine, due to the risks of tobacco litigation or otherwise, that such funds will produce returns equal to or better than those of other investments with comparable risk attributes. A governmental plan fiduciary would need to exercise particular caution if the plan, in the absence of specific legal permission for tobacco-free investments, invested in tobacco-free funds expected to produce lesser returns or pose greater risks than non-restricted funds. The report was reviewed by BNA.

"For every action there is an equal and opposite criticism."

5. NEW YORK RETIREES COULD GET COLA: New York State Comptroller H. Carl McCall, sole Trustee of the $120 Billion Common Retirement Fund, wants to improve pension benefits for public employees. The improvements would be financed by using the fund's investment returns and would not cost state and local governments any additional monies. (Investment performance has virtually eliminated all employer contributions.) The Comptroller's plan would establish a permanent cost-of-living, tied to the consumer price index, to raise pensions annually. Currently, the state legislature must enact a law every time pension benefits are to be supplemented. Quoted in BNA, McCall said "We've done everything we can for public employers. Now it's time to help employees and retirees." Bravo.

6. CENSUS BUREAU SAYS PUBLIC RETIREMENT PLAN ASSETS RISE: A report in BNA indicates that Census Bureau data show assets of state and local retirement systems grew to an all-time high of $1.7 Trillion in 1998, up $237 Million from the year before. According to the Census Bureau, public plan assets were predominantly invested in non-governmental securities ($1.2 Trillion): corporate stocks ($639 Billion); corporate bonds ($258 Billion); foreign securities ($195 Billion); and mortgages and other securities ($159 Billion). Additional public plan assets were held in government stock ($278 Billion), most of it in federal government securities. The remaining $91 Billion was invested in cash or equivalents. One other point of interest: the Census Bureau also found that there were 2,140 public employee retirement systems in the United States in 1998. Supposedly Illinois and Pennsylvania have the most public employee retirement systems, with 374 and 343 respectively. We would doubt the accuracy of these findings, because in 1998 Florida had over 300 police or fire funds plus a general employee system in most cities. Incidentally, 19 states had fewer than 10 systems, with Hawaii and Maine each having just one system for all state and local government employees.

7. STOCK BOOM CAUSES SHIFTING OF FUND ASSETS: Five U.S. public pension funds are rebalancing about $7 Billion in assets following the stock market's strong performance in the fourth quarter of 1999, according to a front page story in Pensions & Investments. Rebalancing often means taking money from overweighted growth equity portfolios and shifting it into areas that haven't performed as well, such as value equity and fixed income. Some examples are $120 Billion New York State Common Retirement Fund - $5 Billion from domestic equity assets into fixed income and private equity; $110 Billion California State Teachers' Retirement System - $1 Billion from equity to fixed income; and $10.4 Billion Kansas Public Employees' Retirement System - $500 Million from equities into fixed income. In some cases, such as with CalSTRS, rebalancing is required by investment policy or by law. We have recently been reporting on the option of taking money off the table as opposed to sitting back and hoping that equities will continue to run (see C&C Newsletter for March, 2000, Item 32).

"When everything's coming your way, you're in the wrong lane and going the wrong way."

8. CALCULATE YOUR SOCIAL SECURITY: A new online calculator from National Center for Policy Analysis allows workers to determine their personal stake in Social Security. Log on to http://www.lexicom.ab.ca/ncpa/calc2 and follow the instructions.

9. NASDAQ HITS 5000: On March 9, 2000, just 71 days after reaching the 4000 mark, the Nasdaq Composite Index closed over 5000 for the first time. (We reported the 3000 plateau, see C&C Newsletter for November, 1999, Item 3, but the 4000 level didn't apparently make the cut.) On the historic day, the Nasdaq benchmark rose 149.69 points (or 3.06%) to 5046.86. The ascent to 5000 took slightly longer than its climb from 3000 to 4000, which it accomplished over a 57 day period ending December 29. Incidentally, it took the Index 24 years to close above 1000, 3 years to reach 2000 and 15 months to hit 3000. One other factoid: the Nasdaq Index now has a price-to-earnings ratio of 56, compared with 24 for the S&P 500. We don't have to tell you what has happened to the Nasdaq in the last month or so.

"You can't win them all, but you sure can lose them all."

10. EBJ ARTICLE DEFENDS SOCIAL SECURITY: The International Foundation of Employee Benefit Plans' March 2000 Employee Benefits Journal contains a short article entitled "In Defense of Social Security." The author's main point is that current proposals for Social Security reform would substitute individual accounts for the existing program and are based on a misunderstanding of the role Social Security is designed to play in providing retirement income. Social Security is social insurance, a program by which our society recognizes the contribution made by workers to our economic welfare. It is fallacious to attack Social Security because it is different from either the actuarial reserve standards of a defined benefit pension plan or the individual account accumulations of a defined contribution plan. Social Security is not a retirement plan -- it is a separate "leg" of an individual's total retirement income. (The other two legs of the retirement stool are pensions and individual savings; see C&C Newsletter for March, 1999, Item 21.) The author goes on to examine, and debunk, the attacks leveled against the present Social Security System. Claim No. 1: Social Security is a "pay-as-you-go" plan, with today's payroll taxes used to pay current benefits. Fact: Social Security has large reserves, sufficient to carry benefits until the year 2034 with no change in contributions; besides, there is nothing wrong in a national social program being on a "pay-as-you-go" basis. Claim No. 2: Social Security's reserves consist of government bonds, so taxpayers will have to pay for Social Security benefits out of current revenue when the bonds are redeemed. Fact: That the federal government has used Social Security's reserves to pay for current governmental programs certainly is not the fault or a weakness of the Social Security System. Claim No. 3: Social Security's benefits are not a "good deal," as personal savings invested in the stock market would produce better results. Fact: validity of the claim depends on the assumptions one makes with respect to current and future income and life expectancy; actual experience shows that the great majority of present retirees receive benefits far in excess of what their contributions would have produced in an individual savings account – not including benefits other than for old age. Claim No. 4: Social Security fails to keep people out of poverty. Fact: Social Security benefits make up almost the total financial support for about 30% of all beneficiaries. Claim No. 5: The success of governmental defined contribution retirement plans proves that an individual account system is better than the present Social Security System. Fact: As stated, there is no point in comparing a local or state governmental retirement plan with a national social insurance program; however, prior to 1950 many state retirement programs were either fully or partially under a defined contribution system, which because of inflation, produced annuities far short of retirement goals, causing a major shift to defined benefit programs. The author has some pretty impressive qualifications. He holds a Ph.D. in International and Constitutional Law and was the first Executive Director of the Pension Benefit Guaranty Corporation.

"Key to longevity -- keep breathing!"

11. FLORIDA CONSTITUTIONAL PROHIBITION ON DUAL OFFICE HOLDING DOES NOT APPLY TO SPECIAL DISTRICT OFFICERS: Article II, Section 5(a), Florida Constitution, provides that no person shall hold at the same time more than one office under the government of the state and the counties and municipalities therein. The constitutional provision clearly applies only to state, county or municipal offices and not to offices of independent special districts. Thus, the fire chief of a fire control and rescue district or any one of the commissioners thereof may be appointed to the district pension plan's board of trustees without violating the constitutional prohibition on dual officeholding. AGO 2000-17 (March 14, 2000).

12. STAMP OUT PUBLIC FUND CORRUPTION -- BEFORE THE DAMAGE IS DONE: The March 2000 Plan Sponsor contains a worthwhile article on corruption in the public pension sector. A chart accompanying the piece is a compilation by the Council of Institutional Investors of the major categories of misconduct that have occurred at public pension funds: (1) the kickback (actually paying for business with cash); (2) pay-to-play (paying for business with campaign or other indirect contributions); (3) paying for business with business; (4) embezzling from soft-dollar accounts; (5) fraudulent allocation of trades; (6) hiding a fund's losses and keeping the gains; (7) churning; (8) overpaying for investments; (9) borrowing against someone else's pension; (10) stealing a deceased person's benefits; and (11) fraudulent recordkeeping. Where trustees wish to regulate their own investment practices, the Council recommends installation of fraud hotlines to report problems, a properly functioning internal audit department, a compliance officer, incentives for accountants to receive additional training in forensic accounting to uncover problems and a suggestion box for employee input.

13. STATUTE MANDATING THAT BENEFITS GO TO SURVIVING SPOUSE UNCONSTITUTIONAL AS APPLIED: BNA reports that a Mississippi statute mandating that pre-retirement death benefits of a public employees' retirement system participant go to his surviving spouse, even when the participant has designated someone else as the beneficiary, is unconstitutional as applied to a participant whose participation in the system predated the statute. Here, in accordance with the provisions of the Mississippi PERS then in effect, a married-but-separated participant named his sister as beneficiary. The next year the Mississippi legislature enacted a statute requiring that pre-retirement death benefits of PERS participants go to the participant's surviving spouse, even if another person was designated as beneficiary. In a case of first impression in Mississippi, the Mississippi Supreme Court held that the statute was unconstitutional, but only as applied to the participant in question. Thus, the court declined to address whether the statute was unconstitutional in all situations. Public Employees' Retirement System v. Porter, Case No. 1999-SA-01058 (Miss., February 24, 2000).

14. SICK ELDERLY SPEND 29% OF INCOME ON HEALTH COSTS: According to a study by the Gerontological Society of America reported in BNA, American senior citizens who report their health status as "poor" spend 29% of their income on out-of-pocket expenses for medical care. These costs include health insurance premiums, medical co-payments and prescription medicines (the last of which make up over one-third of the expenditures!). On average, American senior citizens spend 19% of their total income on out-of-pocket medical expenses.

"Eat right, exercise and die anyway."

15. U.S. PENSION ASSETS EXCEED $10 TRILLION: A front page article in Pensions & Investments says that total pension fund assets hit $10.4 Trillion at the end of last year, an increase of more than 100% from the end of 1994, when they reached $4.9 Trillion. The increase in pension fund assets reflects the stock market rise in the last five years: 200% in the Dow Jones Industrial Average and 220% in the Standard & Poor's 500 Index. (In the five year period between 1980 and 1984, pension fund assets also doubled -- from $800 Billion to $1.7 Trillion -- but almost 80% of the gain was attributable to contributions, whereas only 25% of the recent rise was so attributable.) About $4 Trillion in assets are held by public pension plans. And data show that state and local government defined benefit pension plans reached $2 Trillion in stock ownership (up 11% from the $1.8 Trillion in 1998), representing almost two-thirds of total assets.

16. GFOA APPROVES RECOMMENDED PRACTICES: The Government Finance Officers Association's Executive Board has approved several new and amended recommended practices. According to Pension & Benefits Update, GFOA recommends that public employee retirement systems exercise prudence and care in the use of alternative investments. These investments (generally not included in the traditional investment classes of stocks, bonds and cash) should be limited to fulfilling a measurable objective found necessary or desirable by plan trustees, and should be carried out as part of a strategy based on numerous factors. The Board also adopted five other recommended practices: Use of Lockbox Services; Mark-to-Market Practices for State and Local Government Investment Portfolios and Investment Pools; Repurchase Agreements and Reverse Repurchase Agreements; Presenting Budget-to-Actual Comparisons within the Basic Financial Statements; and Pricing Bonds in a Negotiated Sale. Copies of the Recommended Practices are available online at http://www.gfoa.org.

17. CLAIM SEEKING RECALCULATION OF SOCIAL SECURITY OFFSET BARRED WHERE ISSUE COULD HAVE BEEN PREVIOUSLY ADJUDICATED: Claimant sustained a work-related injury in 1979, began receiving Social Security disability benefits in 1980 and was accepted as permanently and totally disabled in 1982. In 1986, the employer began taking a Social Security offset. In connection with claims for attendant care benefits, merits hearings were held in 1987, 1989 and 1994. In 1997, for the first time, claimant sought recalculation of the Social Security offset and a refund of all offsets taken since 1986. In reversing an order of the judge of compensation claims, the district court of appeal held that the claim is barred by the doctrine of res judicata because it was ripe for adjudication at three prior merits hearings and should have been raised then. Unlike wage-loss, which is a recurring issue and can be relitigated on successive claims, the Social Security offset here was a nonrecurring one. The court found it unnecessary to resolve whether a Social Security offset issue should be treated as recurring if changes in one's entitlement classification or the number of dependents receiving benefits requires a recalculation of the Social Security offset itself. Boynton Landscape v. Dickinson, 25 Fla. L. Weekly D543 (Fla. 1st DCA, February 28, 2000).

"Never underestimate the power of human stupidity."

18. COST-OF-LIVING INCREASES IN DISABILITY BENEFITS NOT INCLUDED IN OFFSET CALCULATIONS: Following one of its own recent decisions, the First District Court of Appeal rejected an employer's claim that cost-of-living increases to in-line-of-duty disability retirement benefits should be included in offset calculations. However, as in the previous case, the court certified the following question to the Supreme Court of Florida as one of great public importance: When calculating the offset for disability retirement benefits pursuant to Escambia County Sheriff's Department v. Grice, 692 So.2d 896 (Fla. 1997), is the employer entitled to include cost-of-living increases to those benefits? One judge concurred in the decision but dissented from certifying the question. He believes that the Supreme Court of Florida's decision in City of Clearwater v. Acker, which prohibits recalculation of the offset based on annual increases in claimant's permanent and total disability supplemental benefits, would also prohibit recalculation of an offset to account for cost-of-living increases in disability retirement benefits (see C&C Newsletter for December, 1999, Item 1). We do, too. University of West Florida v. Alexsis Risk Management, 25 Fla. L. Weekly D544 (Fla. 1st DCA, February 28, 2000).

19. AMERICANS CATCH TAX BREAK: For all but the wealthiest Americans, the Federal Income Tax burden has shrunk to its lowest level since 1955. The Congressional Budget Office estimates the middle fifth of American families, with an average income of $39,100.00, paid 5.4% in income tax in 1999, compared with 8.3% in 1981. The Treasury Department estimates a four-person family, with median income of $54,900.00, paid 7.46% of that in income tax, the lowest since 1965. The Conservative Tax Foundation figures that the median two-earner family, making $68,605.00, paid 8.8% in 1998, about the same as in 1955. And the Congressional Joint Committee on Taxation found that more than one-third of eligible taxpayers paid no income taxes at all. No wonder opinion polls show that many Americans place tax cuts near the bottom of their priorities.

"Money isn't everything, but it sure keeps the kids in touch."

20. FINDINGS OF ADMINISTRATIVE LAW JUDGE NOT BINDING IN WORKERS' COMP PROCEEDING: The Florida Legislature has adopted the Social Security Disability standard for catastrophic injury as a prerequisite for obtaining permanent total disability benefits in those cases where a claimant does not have one of the statutorily-listed permanent impairments. Further, the legislature has required a claimant receiving PTD benefits to apply for Social Security. Thus, the legislature sought to shift the burden of financing and underwriting the cost of PTD from the employer and carriers of this state to the broader shoulders and deeper coffers of the United States Treasury. Nevertheless, despite the statutory intent to render PTD status comparable to disability under the Social Security Act, there is no requirement in the Florida Workers' Compensation Law that a judge of compensation claims be bound by the denial of a claim for Social Security disability benefits. The legislature could have easily included such a requirement, but did not do so. Furthermore, given the fact that the evidence may vary between a workers' compensation proceeding and a proceeding on a claim for Social Security disability benefits, through no fault of the claimant, it would be unjust to view federal disability determinations as carrying binding precedential authority in a workers' compensation proceeding. Florida Distillers v. Rudd, 25 Fla. L. Weekly D547 (Fla. 1st DCA, March 1, 2000).

21. NEW JERSEY WILL SHARE PENSION SURPLUS: The New Jersey Legislature has approved $45 Million for New Jersey municipalities to cover the costs of a new pension benefit for police officers and firefighters. Those benefits, which were adopted in January, provide "20-and-out" for early retirement, increased disability payments and afford surviving spouses a pension of fifty per cent of salary regardless of years worked. The money comes from the $2 Billion surplus that has piled up in the state police and firemen's retirement system. The amendments faced strong opposition from the New Jersey League of Municipalities (sound familiar?), even though municipal and county governments have made no pension contribution for non-uniformed employees since passage of the 1997 Pension Bond Act, which pumped almost $3 Billion from bond proceeds into the state pension systems (see C&C Newsletter for April, 1997, Page 4; C&C Newsletter for July, 1997, Page 4 and C&C Newsletter for November, 1997, Page 6).

22. HIGH SCHOOL SENIORS NOT TOO SWIFT: The Jump$tart Coalition for Personal Financial Literacy has released a new survey of high school seniors revealing that while 46% knew retirement income paid by a company is called a pension, 30% thought it was called Social Security. Almost 75% said a U.S. savings bond or savings account would offer the highest rate of return over eighteen years in saving for a child's education, while less than 25% correctly identified stocks. We wonder if they also thought an F is higher than an A. The survey results were reported in Plan Sponsor's "News Dash."

"Articifial Intelligence is no match for Natural Stupidity."

23. HYBRID PLANS MAY NOT RESULT IN COST SAVINGS: A report from Watson Wyatt Worldwide reveals that the typical company realizes little, if any, pension cost savings when it shifts from a traditional pension to a cash balance or other hybrid plan design. The average employer cost savings during hybrid plan conversions was just 1.4%, after factoring in enhancements generally made together with conversions. In fact, the study found that reduced costs were largely attributable to elimination of early retirement incentives. The study did find, however, a significant redistribution of benefits among workers. A typical 40-year-old who leaves a company after 10 years would receive 2.4 times the benefit under a hybrid plan than under an old pension formula. For a 50-year-old leaving with 20 years of service, the figure is 1.5 times. But the average 60-year-old with 30 years of service would get only 78% of the benefit of the old plan. Readers can view the entire report by going to http://www.watsonwyatt.com/homepage/us/res/CashBalExS.pdf.

24. PRESIDENT CLINTON SIGNS SENIOR CITIZENS FREEDOM TO WORK ACT OF 2000: When President Clinton signed the Senior Citizens Freedom to Work Act of 2000 on April 7, 2000, the Depression-Era earnings test for Social Security benefits was repealed. At a cost of $22 Billion over ten years, the law does away with a provision that reduced Social Security benefits for people between 65 and 69 by $1.00 for every $3.00 of income earned above $17,000.00. Because the repeal was retroactive to January 1, 2000, about 415,000 seniors who lost benefits this year will receive an average $3,500.00. Left intact was a penalty for those between ages 62 and 64 who opt for early retirement and receive reduced benefits -- a loss of $1.00 in benefits for every $2.00 earned over $10,080.00 a year. There was no limit on earnings for those age 70 and older. In a related announcement, the President also unveiled a new internet service offered by the Social Security Administration for younger Americans who want to get an online estimate of future retirement benefits. Located at http://www.ssa.gov/retire, the benefit calculator offers anything from a "quick" calculation to a sophisticated one providing various retirement scenarios. Just last month we mentioned another online Social Security calculator (see C&C Newsletter for March, 2000, Item 9).

25. RETIREMENT FUND FOREIGN JUDGMENT FOR EMBEZZLEMENT NONDISCHARGEABLE, BUT UNCOLLECTIBLE IN FLORIDA: A public pension fund obtained a judgment in Kentucky for embezzlement. The fund domesticated its foreign judgment in Florida pursuant to the Florida Enforcement of Foreign Judgments Act. The judgment debtor filed for bankruptcy in Kentucky, where the judgment was determined to be nondischargeable. In a subsequent bankruptcy in Florida, the court found that the prior determination of nondischargeability was binding. However, the court found the judgment uncollectible, applying Kentucky's fifteen-year statute of limitation rather than Florida's twenty-year limitation. The fund thought it had a pretty good argument: once a foreign judgment is domesticated under the Florida Enforcement of Foreign Judgments Act, it becomes a Florida judgment subject to Florida's statute of limitations. Unfortunately, the fund overlooked the following non-uniform provision added by the Florida Legislature: "Nothing contained in this Act shall be construed to alter, modify, or extend the limitation period applicable to the enforcement of foreign judgments." Policemen's and Firefighters' Retirement Fund of the City of Covington, Kentucky v. Tranter, 13 Fla. L. Weekly Fed. B134 (Bankr. SD Fla., February 15, 2000).

"Police station toilet stolen...cops have nothing to go on."

26. NEWSLETTER TO BE AVAILABLE BY E-MAIL: We will shortly have the ability to e-mail our newsletter. Besides allowing you to receive the newsletter much sooner, e-mail will save reams of paper and the newsletter can be sent directly to every trustee, administrator or other person who supplies us with an e-mail address. Of course, all newsletters will continue to be posted (and archived) on our web site. This month will be a transition period, in which the newsletter will also be mailed -- even if we have your e-mail address. However, if you do not receive this issue electronically as requested, please let us know, as some of you provided illegible addresses.

27. AND MORE DEFINITIONS:

Information Ratio A measure of the consistency of value added by an investment manager. Specifically, the information ratio is the average alpha (see C&C Newsletter for September, 1999, Item 12) divided by the variability of alpha.

Intermediate-Term Bond A bond with a maturity between three years and ten years.

Investment Grade A bond rated BBB or higher by Standard & Poor's Corporation or Baa by Moody's Investment Services. An investment grade bond is higher in quality than a high yield bond (see C&C Newsletter for March, 2000, Item 33) and has lower credit risk.

Copyright, 1996-2004, all rights reserved.

Items in this Newsletter may be excerpts or summaries of original or secondary source material, and may have been reorganized for clarity and brevity. This Newsletter is general in nature and is not intended to provide specific legal or other advice.


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