We have completed our fiscal year (FY) 2008-09 financial audit of the State of Wisconsin Investment Board, as requested by the Investment Board and to fulfill our audit requirements under s. 13.94 (1)(df), Wis. Stats. The Investment Board's financial statements report the investments and investment activity for the Wisconsin Retirement System funds, the State Investment Fund, and five other smaller insurance and trust funds. The statements and our unqualified opinions on them are included in the Investment Board's FY 2008-09 Annual Report, which can be found on the Investment Board's Web site.

The retirement funds, which include the Core Retirement Investment Trust Fund and the Variable Retirement Investment Trust Fund, experienced negative investment returns in FY 2008-09. The Core Fund reported a net investment loss of $13.5 billion, and the Variable Fund reported a net investment loss of $1.6 billion. After factoring in net investment income, net contribution receipts, and benefit disbursements in FY 2008-09, the net investment assets of the retirement funds as of June 30, 2009, were $59.2 billion for the Core Fund and $4.1 billion for the Variable Fund.

The State Investment Fund invests the excess operating funds of State of Wisconsin agencies, the retirement funds, and the Wisconsin Local Government Investment Pool. Net investment income earned by the State Investment Fund decreased 67.7 percent, from $255.7 million in FY 2007-08 to $82.6 million in FY 2008-09 because of lower interest rates in the markets. After factoring in net investment income and net deposits and withdrawals, the State Investment Fund had a net asset balance of $6.4 billion as of June 30, 2009.

The Investment Board is also responsible for investing the assets of five insurance and trust funds: the Injured Patients and Families Compensation Fund, the State Life Insurance Fund, the Local Government Property Insurance Fund, the Historical Society Trust Fund, and the EdVest Tuition Trust Fund. Each of these funds has different investment policies, as established by the agency responsible for the fund and the Investment Board. The largest of these funds, the Injured Patients and Families Compensation Fund, had net investment assets totaling $567.9 million as of June 30, 2009.

Enclosed is a management letter, which includes an auditor's report on internal control over financial reporting and on compliance and other matters, as required by Government Auditing Standards. As noted in this letter, which was provided to the Investment Board, we did not identify any control or compliance concerns that are required to be reported under these standards.