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InvestRFR.doc, 707K Microsoft Word file InvestRFR.doc, 707K Microsoft Word file Document Transcript

  • Request for Response Office of the State Treasurer and Receiver General Address: One Ashburton Place, 12th Floor Boston, Massachusetts 02108-1608 RFR File Name/Title: IRC 457 Deferred Compensation Plan – Investment Management Services RFR File Number: 05-DC-InvestMang RFR Contact Person: John LaCara SECTION I. SUMMARY AND PURPOSE Timothy P. Cahill, Treasurer and Receiver General of the Commonwealth of Massachusetts, requests responses from qualified firms in and outside Massachusetts interested in providing actively managed domestic equity large cap value, actively managed large cap core equity and actively managed growth investment management services, to its IRC 457 deferred compensation plan. More detailed descriptions of these services are set forth under Section IV, "SCOPE OF SERVICES.” The purpose of this RFR is to allow the Office of the State Treasurer (“the Treasury”) to select a firm(s) to provide investment management services for the Commonwealth’s Deferred Compensation Plan offered to state employees. Specific information on the Deferred Compensation Plan may be found in Section III. Firms submitting proposals must meet minimum criteria detailed in Section V, subsection A. 1, (“Minimum Criteria/Requirements”) and submit mandatory documents as described in Section V, subsection A. 2, (“Mandatory Attachments and Enclosures”). SECTION II. GENERAL INFORMATION The Treasury is exempt from 801 Code of Massachusetts Regulations (CMR) 21.00: Procurement of Commodities and Services, but has opted to follow these regulations in this RFR. Therefore, unless a conflict with any other applicable law or statute arises, the Treasury will conduct itself as a “procuring department” as that term is used in 801 CMR 21.00 which provisions are otherwise incorporated herein by reference. Additional definitions may also be identified in this RFR. All terms, conditions, requirements, and procedures included in this RFR must be met for a response to be qualified as responsive. A response that fails to meet any material term, condition, requirement or procedure of this RFR may be deemed unresponsive and disqualified. The Treasury reserves the right to waive or permit cure of non-material errors or omissions. The Treasury reserves the right to modify, amend or cancel the terms of the RFR at any time. Unless otherwise specified, all communications, responses, and documentation regarding this RFR must be in English, all measurements must be provided in feet, inches, and pounds and all cost proposals or figures in U.S. Currency. All responses must be submitted in accordance with the specific terms of this RFR. This RFR is in accordance with the World Trade Organization Government Procurement Agreement. A. SPECIFICATIONS 1
  • 1. BIDDER COMMUNICATION. Any individuals and/or firms that intend to submit a response are prohibited from contacting any employees or members of the Deferred Compensation Plan Oversight Committee, Pension Reserves Investment Management Board, Treasury or any member of the Procurement Management Team (“PMT”), other than the Procurement Officer. An exception to this rule applies to individuals or firms that currently do business with the Treasury, but shall be limited to that business, and should not relate to this RFR. Failure to observe this rule will result in disqualification. Furthermore, no other individual Commonwealth employee or representative is authorized to provide any information or respond to any question or inquiry concerning this RFR. If the bidder is having trouble obtaining any required attachments electronically through www.mass.gov/ osd or Comm-PASS at www.comm-pass.com they may contact the OSD/Comm-Pass help desk at 1-888-627-8283 for assistance. Questions concerning the RFR may be submitted to the RFR Procurement Officer via e-mail (NO PHONE CALLS) to jlacara@tre.state.ma.us no later than September 7, 2004, 12:00 p.m. EST. The Commonwealth's Procurement Officer for this RFR is: John LaCara Director Deferred Compensation Plan Jlacara@tre.state.ma.us In addition, firms that intend to submit a Proposal should not discuss this RFR with any employee of the Commonwealth's current third party administrator, investment managers, consultants, legal counsel or other advisors. Once a proposal has been submitted, the provider agrees to the terms and conditions set forth in the Uniform Electronic Transactions Act and the Electronic Signatures in Global and National Commerce Act for any emails and electronic communications that occur during any subsequent negotiation. Any bidder awarded a contract under this RFR is prohibited from selling or distributing any information collected or derived from the contract and/or procurement process, including lists of participating or eligible Treasury employee names, telephone numbers or addresses. The procurement management team reserves the right to modify, amend or cancel the terms of this RFR at any time. 2. REASONABLE ACCOMMODATION. Bidders with disabilities or hardships that seek reasonable accommodation, which may include the receipt of RFR information in an alternative format, must communicate such requests in writing to the contact person. Requests for accommodation will be addressed on a case-by-case basis. A bidder requesting accommodation must submit a written statement, which describes the bidder’s disability and the requested accommodation to the contact person for the RFR. The Procurement Management Team (PMT) reserves the right to reject unreasonable requests. 3. PUBLIC RECORDS. All responses and information submitted in response to this RFR are subject to the Massachusetts Public Records Law, Massachusetts General Laws (“M.G.L.”), Chapter 66, Section 10, and Chapter 4, Section 7, Clause twenty-sixth. Any statements in submitted responses that are inconsistent with these statutes will be disregarded. Bidders are advised that all proposals are deemed sealed, and therefore their contents will be treated as confidential and will not be disclosed to competing bidders until the evaluation process has been completed and the contract has been awarded. 2
  • 4. ESTIMATED PROVISIONS. The Treasury makes no guarantee that any commodities or services will be purchased from any contract resulting from this RFR. Any estimates and/or past or current procurement volumes referenced in this RFR are included only for the convenience of bidders, and are not to be relied upon as any indication of future purchase levels. 5. CONFLICT OF INTEREST. Prior to award of any contract, the vendor shall certify in writing to the procuring agency that no relationship exists between the vendor and the procuring or contracting agency that interferes with fair competition or is a conflict of interest, and no relationship exists between the vendor and another person or organization that constitutes a conflict of interest with respect to a state contract. The Treasury may waive this provision, in writing, if these activities of the vendor will not be adverse to the interests of the Commonwealth. No official or employee of the Commonwealth who exercises any function or responsibility in the review or approval of the undertaking or carrying out of this project shall, prior to the completion of the project, voluntarily acquire any personal interest, either directly or indirectly, in this contract or proposed contract. The bidder shall provide assurance that it presently has no interest and shall not acquire any interest, either directly or indirectly, which will conflict in any manner or degree with the performance of its services hereunder. The bidder shall also provide assurances that no person having any such known interests shall be employed during the performance of this contract. By submission of a proposal, the bidder agrees to conduct itself in regards to this proposal and any subsequent contract as specified in Massachusetts General Laws, chapter 268A. 6. BRAND NAME OR EQUAL. Unless otherwise specified in this RFR, any reference to a particular trademark, trade name, patent, design, type, specification, producer or supplier is not intended to restrict this RFR to any manufacturer or proprietor or to constitute an endorsement of any service. The Treasury will consider clearly identified offers of substantially equivalent services submitted in response to such reference. 7. ALTERNATIVES. Unless otherwise specified, bidders may submit responses proposing alternatives that provide equivalent, better or more cost-effective performance than achievable under the stated RFR specifications. These alternatives may include related services that may be available to enhance performance during the period of the contract. The response should describe how any alternative achieves substantially equivalent or better performance to that of the RFR specifications. The Treasury will determine if a proposed alternative method of performance achieves substantially equivalent or better performance. The goal of this RFR is to provide the best value of commodities and services to achieve the procurement goals of the department. Bidders that propose discounts, uncharged commodities and services or other benefits in addition to the RFR specifications may receive a preference or additional points under this RFR as specified. Contractors may also propose alternatives for equivalent, better or more cost-effective performance than specified under the Contractor’s original response to enable the department to take advantage of enhanced technologies, commodities or services that become available during the term of the contract. 8. BEST VALUE SELECTION AND NEGOTIATION. The PMT and/or the State Treasurer and Receiver General may select the response(s) that demonstrates the “Best Value” overall, including proposed alternatives that will achieve the procurement goals of the Treasury. The PMT and/or the State Treasurer and Receiver General and the selected bidder, or contractor, may negotiate a change in any element of contract performance or cost identified in the original RFR or the selected bidder's or contractor’s response which results in lower costs or in a more cost effective or better value than was presented in the selected bidder’s or contractor’s original response. 9. COSTS. Costs that are not specifically identified in the bidder's response, and included as part of a Contract, will not be compensated under any Contract awarded pursuant to this RFR. The Commonwealth will not be responsible for any costs or expenses incurred by bidders responding to this RFR. 3
  • 10. COMM-PASS. If this RFR has been distributed electronically using the Comm-PASS system, RFR Attachments that are referenced are available either as separate pdf files along with the RFR, or in the Comm-PASS Forms and Information section at: www.mass.gov/osd or www.comm-pass.com. Bidders are solely responsible for obtaining and completing required attachments that are identified in this RFR and for checking Comm-PASS for any addenda or modifications that are subsequently made to this RFR or attachments. The Commonwealth and the Treasury accept no liability and will provide no accommodation to bidders who fail to check for amended RFRs and submit inadequate or incorrect responses. Bidders are advised to check the "last change" field on the summary page of RFRs for which they intend to submit a response to insure that they have the most recent RFR files. Bidders may not alter (manually or electronically) the RFR language or any RFR component files. Modifications to the body of this RFR, specifications, terms and conditions, which change the intent of this RFR are prohibited and may disqualify a response. 11. DURATION AND RENEWAL OPTIONS. The State Treasurer and Receiver General intends to enter into a 3 year contract with the selected bidder(s) for the services solicited in this RFR. The State Treasurer and Receiver General may, at his option, extend the contract for 2 additional 1 year periods, under the same or better terms and conditions as negotiated. Furthermore, the State Treasurer and Receiver General will have the option of extending this agreement up to an additional 5 years if deemed in the best interest of the Commonwealth under the same terms and conditions or better as negotiated. Bidders who offer price guarantees for the additional 5 years will be held to that offer or such better terms as are negotiated. 12. Responses must remain in effect for at least 120 days from the submission deadline and thereafter until either the bidder withdraws the response in writing, a contract is executed or the procurement is canceled, whichever occurs first. 13. MFN. The winning Manager(s) agrees that in the event it subsequently enters into a comparable agreement with a similar type of client pursuant to which it manages an amount of assets for the entire client relationship equal to or less than the assets managed under this Agreement for the same or substantially similar investment strategy and investment vehicle, and pursuant to which it charges a lower fee rate, then the Manager shall reduce the fee structure with respect to the Office of the State Treasurer to the lower fee rate, beginning at the time the lower fee is charged to the other client. However, clients with performance based fee arrangements shall not be considered for purposes of this provision. 14. ACQUISITION METHOD  Outright Purchase  Lease Purchase  License  Rental (not to exceed 6 months)  Fee for Service  Term Lease  Tax-exempt Lease Purchase  Other (specify) 15. SINGLE OR MULTIPLE CONTRACTS. The State Treasurer and Receiver General reserves the right to award contracts to a single vendor or multiple vendors, in the best interest of the Treasury. The contractor must agree to cooperate with such other contractors, and must not commit or permit any act that may interfere with the performance of work by any other contractor. 16. CONTRACT GUIDELINES (those that apply are checked).  Only The Treasury may contract under RFR  Option to allow other Departments/political subdivisions to contract under RFR  Statewide Contract  Multi-Treasury User Contract  Pre-Qualification List 4
  • 17. ANTICIPATED EXPENDITURES, FUNDING OR COMPENSATION FOR EXPECTED DURATION. Subject to selected bidder’s quotes and rates, subject to negotiation. 18. CHANGE IN TERMS. The Office of the State Treasurer and Receiver General reserves the right to modify the specifications identified in the RFR at any time prior to award of the Contract. The PMT may request documentation relating to any stated requirement of this RFR prior to award of the Contract. The Office of the State Treasurer and Receiver General reserves the right to negotiate with the selected bidder(s) as to any element of cost or performance, including without limitation, elements identified in the RFR and/or the selected bidder’s response in order to achieve the best value for the Commonwealth. 19. TERMINATION OR SUSPENSION. Contractor’s services may be terminated or suspended from the State Treasurer and Receiver General’s contract for poor performance, failure to perform, fraud or other cause with two (2) weeks prior written notice by the Treasury. Contractors may be terminated from the contract without cause upon thirty (30) days prior written notice. The contractor may not terminate the contract or performance thereunder except upon a minimum of 180 days written notice to the Treasury. Other terms regarding contract termination are subject to negotiation between the selected bidder(s) and the Treasury. 20. PERMITS AND COMPLIANCE. The contractor shall procure and pay for all permits, licenses and approvals necessary to perform the services solicited in this RFR. The contractor shall comply with all applicable laws, ordinances, rules, orders and regulations related to the performance of the services solicited, and provide copies as requested by the Office of the State Treasurer. 21. REJECTION OF PROPOSALS. The Treasury reserves the right to reject any and all proposals submitted under this solicitation. 22. FEES SUBJECT TO TREASURY SIGNATORY AUTHORIZATION. All fees must be approved by the State Treasurer and Receiver General or his designee and are subject to verification of performance. 23. SUBCONTRACTING POLICIES. Prior approval of the department is required for any subcontracted service of the contract. Contractors are responsible for the satisfactory performance and adequate oversight of its subcontractors. Subcontractors are required to meet the same state and federal financial and program reporting requirements and are held to the same reimbursable cost standards as contractors. 24. CONTRACT EXPANSION. If additional funds become available during the contract duration period, the department reserves the right to increase the maximum obligation to some or all contracts executed as a result of this RFR or to execute contracts with contractors not funded in the initial selection process, subject to available funding, satisfactory contract performance and service or commodity need. 25. CONCURRENT CONTRACTS RUNNING (RENEWALS AND TRANSITIONS). The Treasurer and Receiver General shall cancel the contract if funds are not appropriated or otherwise made available to support continuation of performance in any fiscal year succeeding the first year or if satisfactory performance by the contractor does not ensue. The Treasurer and Receiver General will also have the right to sole discretion in exercising an option to renew, which will not be subject to contractor acceptance or agreement. Any assistance required for this transition must be provided in a smooth and timely manner. If at any time the contract is canceled terminated or expires, and a contract is subsequently executed with a firm other than the Contractor, the Contractor has the affirmative obligation to assist in the smooth transition of contract services to the subsequent Contractor. 5
  • 26. FIDUCIARY STATUS OF THE MANAGER; CHAPTER 268A. With respect to the performance of its duties and responsibilities hereunder, the Manager acknowledges that it is a fiduciary, and that the Manager will discharge its duties and responsibilities under this Agreement in accordance with the fiduciary standards of conduct and other requirements as they apply to the Manager. The Manager is advised of the existence of Massachusetts General Laws, Chapter 268A (the Massachusetts "Conflict of Interest" statute), and is required to act and perform its duties in accordance with such provisions. B. PROCUREMENT CALENDAR AND RESPONSE REQUIREMENTS 1. PROCUREMENT CALENDAR All dates are subject to modification by the Office of the State Treasurer and Receiver General.  Issuance of RFR: August 23, 2004  RFR Question Deadline: September 7, 2004, 12:00 p.m. EST *  Responses to Questions: September 14, 2004 **  RFR Submission Deadline: September 28, 2004, 12:00 p.m. EST  Notification of Finalists: October 26, 2004 (Tentative)  Due Diligence Interviews: Week of November 15, 2004 (Tentative)  Award Date: Week of November 29, 2004 (Tentative)  Effective Date: TBD * Questions concerning the RFR may be submitted via e-mail (NO PHONE CALLS) to jlacara@tre.state.ma.us, no later than September 7, 2004, 12:00 p.m. EST. ** Responses to questions will be posted on http://www.mapension.com & http://www.com- pass.com. 2. INSTRUCTIONS FOR SUBMISSION OF RESPONSES In order to be considered, the original (unbound), three (3) hard copies, and two floppy disks or compact disks of the bidder’s response and attachments must be delivered to the Plan in the same sealed package no later than September 28, 2004, 12:00 p.m. EST (“The Response Deadline”). Two copies shall also to be forwarded to the Plan’s investment consultant (see relevant addresses below). The Fee Proposal (Section IX) must be submitted in the same package as the response in a separate sealed envelope, clearly marked “FEE PROPOSAL” with the firm’s name. See below: Submit the following: 1) Original Proposal (unbound) & three (3) copies 2) Original Fee Proposal & three (3) copies (separate sealed envelope) 3) 2 Floppy Disks or Compact Disks 4) One (1) electronic copy of Proposal to jlacara@tre.state.ma.us Any response delivered after the Response Deadline will not be considered. 6
  • Responses are to be sent to the attention of: John LaCara Deferred Compensation Office of the State Treasurer One Ashburton Place, 12th Floor Boston, Massachusetts 02108-1608 In addition, please send two copies of your response to the Plan’s investment consultant: David Lindberg, CFA Wilshire Associates 210 Sixth Avenue, Suite 3720 Pittsburgh, PA 15222 Copies of this RFR can also be obtained electronically at the PRIM Board’s website at http://www.mapension.com & http://www.com-pass.com. 7
  • SECTION III. DEFERRED COMPENSATION PLAN BACKGROUND INFORMATION (1) PLAN The Commonwealth established its deferred compensation plan (hereafter referred to as "the Plan") in 1976 as a non-qualified public employee benefit plan. The Plan is intended to comply with Section 457 of the Internal Revenue Code and the Treasury Regulations promulgated thereunder. The Plan currently has assets of approximately $3.2 billion, with approximately 91,000 full-time participants and approximately 152,000 part-time (OBRA) active participants, and is administered by ING Financial Services (“ING”). A copy of the Plan document will be provided to firms upon written request. (2) EMPLOYER BACKGROUND The Commonwealth's 457 Plan is available to public employees in Massachusetts, including state employees, public school teachers, and employees of cities, towns, political subdivisions and instrumentalities. (3) INVESTMENT OPTIONS Participants in the Plan currently have the following investment options: A. THE INCOME FUND The Income Fund is a diversified portfolio of stable value investment contracts negotiated by INVESCO, Inc. with insurance companies to provide for payment at book value of participant withdrawals, transfers, and other allowable Plan benefit elections. The majority of Fund assets are invested in contracts containing high quality fixed income investments that are managed by BlackRock Financial Management, Inc., Declaration Management & Research Inc. and INVESCO, Inc. In addition, INVESCO’s portion of the Fund holds insurance company issued Guaranteed Investment Contracts (GICs) and cash or short-term investments. The Income Fund seeks to provide a relatively high fixed income yield with little market-related risk. Of primary importance is the preservation of principal and earned interest. Secondary to the preservation of capital is the need to generate, over time, a composite yield in excess of short-term yields available in the fixed income marketplace. The Omnibus Budget Reconciliation Act of 1990 (OBRA) requires that state employees who are not eligible to participate in the Commonwealth’s Defined Benefit Plan (such as part-time, seasonal or temporary employees, etc.) have a contribution option. Otherwise, these employees and the Commonwealth would be required to contribute to Social Security. The Income Fund fulfills this OBRA requirement and receives the 7.5% mandatory contributions of the Plan’s OBRA participants. B. CORE INVESTMENT OPTIONS  Money Market Fund: Vanguard Prime Money Market Fund Institutional Shares Investment objective is to provide current income while maintaining liquidity and a stable share price of $1. 8
  •  Active Fixed Income: PIMCO Total Return Fund Institutional Shares Investment objective is to seek maximum total return, consistent with preservation of capital and prudent investment management.  Passive Fixed Income: Barclays Global Investors U.S. Debt Index Fund Investment objective is to seek to match, before deduction of fees and expenses, the total return of the Lehman Aggregate Bond Index.  Active Large Cap Equity: The Fidelity Fund Investment objective is long term capital growth.  Passive Large Cap Equity: State Street S&P 500 Flagship Fund Series A Investment objective is to match the total return performance of the S&P 500 Index.  Active Small Cap Equity: Active Small Cap Stock Portfolio managed by Wellington Management Company, LLP. The objective of the portfolio is to provide long-term returns in excess of the Russell 2000 Index by investing in equity securities of high-quality small companies.  Passive Small Cap Equity: State Street Russell 2000 Securities Lending Fund Series A Investment objective is to match the total return performance of the Russell 2000 Index.  Active International Equity: Capital Guardian International (Non-U.S.) Equity Fund Investment objective is long term growth of capital and income though investments in a portfolio comprised primarily of equity securities of non-U.S. issuers and securities whose principal market is outside the U.S.  Active REIT Fund INVESCO Equity Real Estate Securities Trust Investment objective is to seek current income with long term-appreciation generally investing in REIT and other publicly traded stocks that derive a substantial portion of their revenues from the real estate industry. • Active High Yield Fund PIMCO High Yield Fund- Institutional Seeks maximum total return consistent with preservation of capital and prudent investment management by investing in a diversified portfolio of high yield securities. • Passive Treasury Inflation Protected Securities State Street Passive Treasury Inflation Protected Securities Strategy, Series A Investment objective seeks to match the return of the Lehman Brothers Inflation Notes Index by investing in a portfolio of US Treasury inflation protected securities.  Passive International Equity: State Street Daily EAFE Securities Lending Fund Series A Investment objective is to match the total return performance of the (MSCI) EAFE Index.  Aggressive Lifecycle Fund* 9
  • The investment objective is to provide long-term growth of capital with income as a minor consideration.  Moderate Lifecycle Fund* The investment objective is to provide long-term total return through a combination of capital growth and income.  Conservative Lifecycle Fund* The investment objective is to provide total returns with an emphasis on income and lower volatility of principal. *Lifecycle/Asset Allocation (various blends of the four passive investment options) C. ADDITIONAL INVESTMENT OPTIONS  Socially-Responsible: Domini Social Equity Fund The portfolio seeks to provide long term total return that matches the performance of the Domini 400 Social Index, an index made up of the stocks of 400 companies selected using social and environmental criteria. The Index is composed primarily of large capitalization US companies.  Growth: Fidelity Growth Company Fund The portfolio seeks capital appreciation  Value: Active Large Cap Value Portfolio managed by Wellington Management Company, LLP. The portfolio seeks to achieve long-term total return in excess of the Russell 1000 Value index by investing primarily in US securities undervalued relative to the benchmark index.  Mutual Fund Window: HarrisDirect.  Personal Financial Advice Service: ING Financial Horizons D. LIFE INSURANCE Universal Life Insurance is currently offered to participants by Monumental Life Insurance Company (Aegon Insurance Group). This option is closed to new participants. (4) TOTAL ASSETS ($3,247M) BY INVESTMENT PRODUCT AS OF JUNE 30, 2004: (amounts in thousands) The Income Fund (Stable Value) $1,054,685 Vanguard Prime Money Market Fund 41,431 PIMCO Total Return Fund 79,909 BGI US Debt Income Fund 28,203 Fidelity Fund 623,762 Fidelity ® Growth Company Fund 566,962 Wellington Active Large Cap Value 39,850 State Street S&P 500 Flagship Fund Series A 139,933 10
  • Wellington Small Cap Equity Fund 269,637 State Street Russell 2000 Index Fund 28,224 Capital Guardian International (Non-U.S.) 102,118 State Street EAFE Fund 7,866 Aggressive Lifecycle Fund 11,778 Moderate Lifecycle Fund 197,800 Conservative Lifecycle Fund 9,921 Domini Social Investment Fund 18,525 HarrisDirect Account 26,841 INVESCO REIT Fund Not Available Inception date July 19, 2004 PIMCO High Yield Fund Not available Inception date July 19, 2004 State Street TIPS Index Not available Inception Date July 19, 2004 (5) RECORDKEEPING, ADMINISTRATION, TRUST AND EDUCATION SERVICES ING Financial Services is the third party administrator (providing recordkeeping, administration, communication/education, and trust services) in combination with the previously listed investment options. The Universal Life investment option is issued and administered by Monumental Life Insurance Company with monthly feeds to Aetna for participant level information and service. The terminal funding annuity option is issued and administered by John Hancock with Aetna facilitating this option’s participant education and application procedure. All other investment providers maintain records on an unallocated basis with the third party administrator maintaining the individual participant records. Participants are allowed unlimited transfers of their funds between products without sales charge or other fees, except for those transfers from the Income Fund to the money market fund, which are subject to a six month equity wash. ING administers all facets of the employee communication/education program. A wide array of customized material is currently used including, but not limited to: deferred compensation plan brochures, Plan information kit, quarterly newsletters, payroll stuffers, flyers, investment options guide, posters, model portfolio software, and a general library of retirement and financial education literature. Additionally, ING utilizes a team of licensed account executives, each assigned to and working from a specific geographic sector of the state, to conduct individual counseling sessions for enrolling and educating employees of the Commonwealth and participating local employers. ING also provides service via regional Investor Centers located around the state. Account executives are also used to conduct one-on-one benefit counseling sessions when employees retire or terminate employment. In addition to conducting group meetings, which provide an introduction to the Plan, account representatives additionally provide educational programs at a workplace to review various financial, tax, retirement and other planning topics and provide personal action steps for an individual to follow to meet personal retirement goals. (6) CURRENT ADVICE SERVICES ING Financial Advisors (IFA) administers all facets of the current individualized investment advice program, which was implemented in July 2002. IFA employs a traditional, "face to face" advice delivery model in which participants meet individually with a full time Certified Financial Planners by appointment at ING regional service centers. The program is introduced to all Plan participants via educational seminars in major locations throughout the Commonwealth. If interested, participants can then elect to schedule appointments with an IFA Certified Financial Planner. In addition, IFA provides a more intensive 11
  • Retirement Readiness Program available to participants nearing retirement. IFA compiles detailed information concerning the Enrolled Participant’s financial situation, investment objectives and risk tolerance. The information collected includes both Plan Account information as well as non-Plan interests, such as IRA investments, savings and investment accounts and interests in other tax favored retirement savings plans (“Household Assets”). IFA prepares and delivers to the Enrolled Participant an asset allocation analysis which provides information and recommendations on the allocation of the Enrolled Participant’s assets among asset class categories in a manner that is consistent with the Enrolled Participant’s objectives, current financial status and risk tolerance. IFA will make specific investment recommendations to the Enrolled Participant regarding implementation of the asset allocation analysis among the Plan’s available investment options, including the Plan’s self directed brokerage mutual fund window investment option. Periodically, IFA may recommend a re-balancing of the Enrolled Participant’s Plan Account based upon market conditions, changes in the Enrolled Participant’s situation or to remain consistent with the asset allocation strategy and participants risk tolerance. IFA also provides periodic mailings and communications to Enrolled Participants triggered by developments such as change in market conditions, changes in the objectives or style or other changes that might affect Enrolled Participants’ Plan Account investment strategy. SECTION IV. SCOPE OF SERVICES The purpose of this Request for Response is to select one or more firms to provide investment services to the Commonwealth’s IRC 457 Deferred Compensation Plan. Respondents will be permitted to submit proposals for each investment product alone or in combination. Proposals for each investment product will be evaluated separately; however, the Commonwealth will consider the fact that certain combinations of services may permit more favorable fee arrangements for the Plan, while still preserving a variety of investment service providers. The Commonwealth will consider investment proposals in the following: 1. ACTIVELY MANAGED DOMESTIC EQUITY LARGE CAP VALUE: Investment objective is long term total return benchmarked against the Russell 1000 Value index (mandate size is over $39 million as of June 30, 2004). 2. ACTIVELY MANAGED LARGE CAP CORE EQUITY: Investment objective is long term capital appreciation benchmarked against the S&P 500 index. (mandate size is over $623 million as of June 30, 2004). 3. ACTIVELY MANAGED GROWTH: Investment objective is capital appreciation benchmarked against the Russell 3000 Growth index (mandate size is over $566 million as of June 30, 2004) The Commonwealth reserves the right to select the investment vehicle(s) that is in the best interest of the participants (i.e. mutual fund institutional class shares, institutional commingled fund, separate account, etc.). Additionally, the Commonwealth reserves the right to select an investment structure and investment management team that is in the best interest of the participants, as well as select multiple providers. Investment managers must have capabilities to interact with ING’s recordkeeping system requirements, provide daily net NAV and unitization, and provide support regarding the communication/education of the subject product in conjunction with ING and the Commonwealth. 12
  • SECTION V. EVALUATION & SELECTION PROCESS The RFR Evaluation Process will be conducted in two phases: 1. PHASE ONE: The PMT will evaluate all responses to verify that they meet all the criteria/requirements & mandatory attachments contained in SECTION V, subsection A (“PHASE ONE CRITERIA/REQUIREMENTS & MANDATORY ATTACHMENTS”). The purpose of the Phase One Review is to eliminate any bids that are non-responsive or do not meet to the requirements of the RFR. Lack of compliance will automatically disqualify the bidder. Please complete Attachment C (“Mandatory Attachment Checklist”) to ensure completion of required documents and attach it to the cover letter. 2. PHASE TWO: Qualified bids based on the Phase One Review will be considered for additional review in Phase Two. The PMT will apply criteria detailed in SECTION V. subsection B. (“PHASE TWO CRITERIA FOR EVALUATION”) of an investment manager(s). The PMT will assign a rating of either "Highly Advantageous", "Advantageous", "Acceptable", "Not Advantageous" or "Unacceptable" to all qualifying Proposals. Any Proposal receiving a rating of "Unacceptable" in any applicable category will not be considered further. A. PHASE ONE CRITERIA/REQUIREMENTS & MANDATORY ATTACHMENTS AND ENCLOSURES 1. MINIMUM CRITERIA/REQUIREMENTS Firms submitting Proposals must meet the following minimum criteria and complete Attachment A “Representations and Warranties” to be considered further: a. The candidate must be SEC-registered or exempt from registration with the nature of the exemption provided. The candidate must submit its full Form ADV (Parts I and II); b. The candidate must be willing to include the representations and warranties (Attachment A); c. The investment professionals must have the following performance history length in the product being proposed as of June 30, 2004.  Actively Managed Domestic Equity Large Cap Value 5 Years  Actively Managed Large Cap Core Equity 5 Years  Actively Managed Growth 5 Years d. The investment professionals whose performance history is submitted must be the team responsible for the management of the Commonwealth’s account. e. The candidate must have at least three IRC 401K, 403B or 457 plans directly invested in the subject product being proposed, as of June 30, 2004 13
  • f. The candidate must have at least the following minimum assets (taxable & tax exempt) under management in the subject product being proposed:  Actively Managed Domestic Equity Large Cap Value $1 billion  Actively Managed Large Cap Core Equity $1 billion  Actively Managed Growth $1 billion 2. MANDATORY ATTACHMENTS AND ENCLOSURES Any attachments referenced in this RFR as a required document can be found in the OSD Forms section under “Related Links” on www.mass.gov/osd. These documents may be downloaded and printed for you to complete and submit. If you do not understand these instructions or you require additional assistance, please contact the OSD/Comm-PASS help desk at 1-888-627-8283. Note: The mandatory attachments indicated below are in addition to the inclusion of the RFR questions and answers and must be attached to the bidder’s response. Please complete Attachment C (“Mandatory Attachment Checklist”) to ensure completion of each mandatory item and attach it to the cover letter. The bidder’s response must include all completed mandatory attachments/items listed below: a) QUESTIONAIRES. Sections VII and VIII. b) REPRESENTATIONS AND WARRANTIES (signed). The Representations and Warranties contained in Attachment A must be signed by an authorized officer of the firm. c) COVER LETTER (signed). The Proposal must be accompanied by an original and three (3) copies of the cover letter, which will be considered an integral part of the Proposal, and which shall be signed by at least one individual who is authorized to bind the firm contractually. This cover letter must include: (a) the firm name, address, telephone/fax numbers, and e-mail address; (b) the client contact; (c) the title or position which the signer of the cover letter holds in the firm. Also, please attach the “Mandatory Attachment Checklist” (Attachment C) d) DISCLOSURE STATEMENT (signed). Attached to this RFR, as Attachment B, is a Disclosure Statement that each firm submitting a Proposal must complete and submit. e) PERAC DISCLOSURE (signed). Attached to this RFR, (Exhibit I), is instructions for retrieving a PERAC DISCLOSURE document. This document must be completed and executed in addition to “Disclosure Statement” (d) above. f) FEE PROPOSAL (signed). The original and three (3) copies of the fee proposal, contained in Section IX (the “Fee Proposals”), must be placed in a separate, sealed envelope, clearly identified on the outside as “Fee Proposal submitted by (COMPANY NAME).” Also include two copies to Wilshire Associates. g) COMMONWEALTH TERMS AND CONDITIONS (signed). The Commonwealth Terms and Conditions shall be incorporated by reference into any contract for services executed pursuant to this RFR. Complete all blanks and required information fully and accurately without modification. 14
  • h) STANDARD CONTRACT FORM AND INSTRUCTIONS (signed). This form must be completed and returned as part of the bidder’s RFR response. This document shall not become a final contract unless and until the Office of the State Treasurer and Receiver General accepts the bidder's response and the Standard Contract Form is executed by the Purchasing Office of the Office of the State Treasurer and Receiver General. i) REQUEST FOR TAXPAYER IDENTIFICATION NUMBER AND CERTIFICATION (W-9) (signed). The W-9 Form must be completed and signed. j) CONTRACTOR AUTHORIZED SIGNATURE VERIFICATION FORM (signed). This form must be completed. k) NORTHERN IRELAND NOTICE AND CERTIFICATION (signed). All bidders must complete the Northern Ireland Notice and Certification form to satisfy M.G.L. c.7 section 22C, which states that no state agency may procure commodities or services from any bidder employing ten (10) or more employees in an office or other facility located in Northern Ireland unless the bidder certifies through the notice and certification form that if it employs ten or more employees in Northern Ireland, a) the bidder does not discriminate in employment, compensation or the terms, conditions and privileges of employment on account of religious or political belief, b) the bidder promotes religious tolerance within the workplace and the eradication of any manifestations of religious and other illegal discrimination and, c) the bidder is not engaged in the manufacture, distribution or sale of firearms, munitions, including rubber or plastic bullets, tear gas, armored vehicles or military aircraft for use or deployment in any activity in Northern Ireland. Each bidder must complete and return this form with its response, even if not applicable, in order to be considered responsive. l) AFFIRMATIVE MARKET PROGRAM (AMP) PLAN FORM (signed). Separate document from “Affirmatice Action Plan Form” (m) below. This document must be executed and returned regardless of information provided. Although the Treasury is exempt from Executive Order 390, we are committed to developing and strengthening Minority, Women Owned, and/or Disadvantaged Business Enterprised (M/WBEs and DBEs)** and expanding equal opportunity in the primary industries affected by this RFR. The Commonwealth of Massachusetts is always encouraging businesses to partner with M/WBEs to support business relationships that will result in the development and growth of M/WBEs within these primary industries. Bidders are strongly encouraged to develop creative initiatives to help foster new business relationships with M/WBEs and DBEs. As a result, bids which clearly demonstrate how the proposal will further these goals will receive favorable consideration. **M/WBEs and DBEs are defined as businesses that have been certified as such by the State Office of Minority and Women Buiness Assistance (SOMWBA). Firms seeking certification may contact SOMWBA at (617) 727-8692 or visit their website at www.magnet.state.ma.us/somwba. Bidders should be aware that if they commit to participating in the Affirmative Market Program, their performance must be reported and will subject to audit. Reports must be submitted to the Office of the State Treasurer and Reciever General on a timely basis. If the dollar amount reported is less that the commitment, a narrative must be provided demonstrating the contractor’s diligence in attempting to meet the committed percentage. In order to satisfy this section, the bidder must submit: the names, address, phone numbers and contact persons of each M/WBE firm; a description of each business relationship to be established; and the actual dollar amounts, or percentages, to be awarded to each M/WBE firm. Minority-Owned Business Enterprises (MBEs) and Woman-Owned Business Enterprises (WBEs) must submit a copy of their State Office of Minority and Women’s Business Assistance (SOMWBA) certification letter for the current period. A directory of SOMWBA certified firms is available via the internet at 15
  • http://www.mass.gov/somwba. Additionally, the following components should be included as part of any Affirmative Market Program Plan submission: Sub-contracting Bidders should submit projected benchmarks or commitment to future expenditure during the life of the contract with M/WBEs through subcontracting. This should include expenditure commitments, copies of subcontracting agreements, and Memos of Understanding or otherwise binding commitments between the bidder and certified M/WBE firms. Growth and Development Bidders should submit projected benchmarks or commitments to future expenditure during the life of the contract with M/WBEs through Growth and Development. This should include commitments for expenses for education, training, mentoring, resource sharing, joint activities, and assistance in attaining SOMWBA certification that would increase industry capacity and the pool of qualified SOMWBA certified companies. Other creative options are encouraged in this area and should be submitted. Ancillary Uses of Certified M/WBE Firm Bidders should submit projected benchmarks or commitment to future expenditure during the life of the contract with M/WBEs through Ancillary Uses of M/WBE firm(s). Responses should include expenditure commitments from the bidders for the use of certified M/WBE firm(s) with or without the use of written commitments between the bidder and M/WBE firm(s). A description of the ancillary uses of certified M/WBEs, if any, must be in the AMP Plan Form. Past Performance Bidders should include information on past expenditures with certified M/WBEs for the previous two years. m) AFFIRMATIVE ACTION PLAN FORM. (signed) This form must be completed. In addition, bidders with a current Affirmative Action Plan are required to attach a copy to the RFR response. n) CONSULTANT CONTRACTOR MANDATORY SUBMISSION FORM (signed). Each bidder must complete, sign and return this form with its response, even if not applicable, in order to be considered responsive. o) BUSINESS REFERENCE FORM. (in addition to questionnaire response) Bidders must identify three (3) customer references for which the bidder has performed similar services as those described in this RFR or customers that can confirm the quality of the bidder’s performance on previous contract work. Three references must be submitted for each component that the bidder is responding to. If a bid is submitted for multiple components, references can be combined where multiple services are provided. p) TAX COMPLIANCE CERTIFICATION. (certificate / proof of application) The bidder must demonstrate that it is in compliance with all Federal and Commonwealth tax laws (regardless of corporate locations) including M.G.L. Chapter 62C, Section 49A. The bidder must submit an original or photocopy of a Certificate of Tax Compliance in Good Standing, which has been issued by the Department of Revenue within the past year. This Certificate may be obtained by submitting a request to: Taxpayer Services Division, Certificate Unit Department of Revenue PO Box 7066 Boston, Massachusetts 02204 (617) 887-6550 617 16
  • 618 The application must list the tax types for which the business is liable, including such items as meals, room occupancy, sales, use, withholding, corporate income and others as applicable. The issuance of the certificate normally takes several weeks, so bidders should also indicate that their request for a certificate is sought in connection with a Commonwealth solicitation (with a deadline). If the bidder does not submit the requested tax certificate with the proposal, the bidder must submit documentation verifying that the appropriate application has been filed and the Certificate must be issued and provided prior to final execution of the Standard Contract Form. 619 B. PHASE TWO CRITERIA FOR EVALUATION The PMT will assign a rating of either "Highly Advantageous", "Advantageous", "Acceptable", "Not Advantageous" or "Unacceptable" to all qualifying responses in each of the categories listed below. Any response receiving a rating of "Unacceptable" in any applicable category will not be considered further. 1. STABILITY AND GENERAL EXPERIENCE OF THE FIRM. a. Stability of the firm, as measured by the quality of the organizational structure of the firm; the existence of, or potential for, significant developments in the firm; and the expected financial stability of the firm. b. Experience of the firm in providing investment management services to similar institutional investors, as measured by the firm's history of providing such services; and the similarity of a firm's clients to the Commonwealth. c. Adverse organizational issues, such as the existence of litigation or other investigations; and the existence of financial problems. 2. QUALITY, STABILITY, DEPTH AND EXPERIENCE OF PERSONNEL. a. Experience of portfolio manager(s) in providing similar services to similar institutional investors, as measured by the length of time the portfolio manager(s) has served as a portfolio manager to such investors; demonstrated expertise in providing such services to other such investors; demonstrated organizational skills, and demonstrated ability to interact with both the staff and oversight body of the Commonwealth. b. Experience of professionals in providing investment management services as measured by the length of time dedicated support staff have provided such services to similar institutional investors. c. Depth of personnel, as measured by the firm's account/portfolio manager and account/investment management personnel ratios; and back-up procedures for providing services to the Commonwealth in the absence of the portfolio manager(s). d. Stability of the firm's professional base, as measured by personnel turnover. 3. CLIENT RELATIONS AND REFERENCES a. Stability of the firm's client base, as measured by the number of accounts gained or lost 17
  • b. Quality of references from clients, as measured by responses relating to quality and responsiveness of investment management services; knowledge and accessibility of the portfolio manager(s); and the quality of client services. 4. PHILOSOPHY/PROCESS a. Philosophy and portfolio characteristics that are consistent with the overall structural objectives of the asset class as measured by the fundamental investment characteristics and market capitalization of the portfolio. b. Defined philosophy and consistent process implementation, as measured by return consistency, distinct buy/sell disciplines, portfolio construction methodology, and the implementation of risk controls. 5. PERFORMANCE AND FEES a. The total cost of performing investment services as measured by the Fee Proposal. b. The historical performance of the product as measured by its cumulative and annual performance compared to the respective index over multiple time periods. Using these ratings as a guide, in cunjuction with Fee Proposals, finalists will be selected. C. DUE DILIGENCE INTERVIEW The PMT may require bidders, determined to be finalists, to a due diligence interview as part of Phase two Evaluation. The time allotments and the format shall be the same for all bidders. The PMT will give notice of at least two (2) business days prior to the date of an interview. The PMT may waive the location and medium requirements of a due diligence interview upon the written request of a bidder due to special hardships, such as a bidder with disabilities or limited resources. In these circumstances the PMT may conduct interviews through an alternative written or electronic medium (e.g., telephone, videoconference, TTY or Internet). The PMT may require the bidder’s key personnel to attend the interview. A bidder’s failure to agree to an interview may result in disqualification from further consideration. D. ON SITE VISITS The PMT may conduct on site inspections of any or all bidder locations at any time prior to the awarding of this contract to verify the bidder’s ability to perform the services required. The PMT shall schedule the time of these site visits and shall provide notice of at least three business days before a visit. Failure to agree to a site visit may result in disqualification of a bidder’s proposal. E. SELECTION OF PROVIDERS The engagement will be awarded by the Treasurer and Receiver General of the Commonwealth of Massachusetts, who may accept the recommendations of the PMT or select other firm(s) to provide services to the Commonwealth. 18
  • F. DISQUALIFICATION OF PROPOSALS 1) Late Proposals: Proposals that are received after the deadline date and time shall be automatically disqualified. 2) Non-responsive Proposals: Proposals which are not responsive or which fail to comply with mandatory requirements of the RFR shall be considered non-responsive and shall be disqualified. Non-responsive proposals shall include, but not be limited to those, which fail to address or meet any mandatory item, and those submitted in insufficient number, or in incorrect format. 3) Collusion: Collusion by two or more bidders agreeing to act in a manner intended to avoid or frustrate fair and open competition is prohibited and shall be grounds for rejection or disqualification of a proposal or termination of this contract. 4) Debarred Bidders or Subcontractors: A bidder who is currently subject to any Commonwealth or federal debarment order or determination, shall not be considered for evaluation by the Procurement Team. If a bidder’s proposal is dependent upon the services of a named subcontractor and the disqualification of this named subcontractor would materially alter the proposal, then that proposal shall be deemed unresponsive if the named subcontractor is found to be debarred. Proposals that indicate that subcontractors will be used, but do not rely on any specifically named subcontractor, shall not be deemed unresponsive if the disqualification of a proposed subcontractor will not materially alter the proposal. SECTION VI. MANAGEMENT AGREEMENT Respondents must agree to enter into an agreement substantially similar to the Commonwealth’s standard agreement referred to as the Investment Management Agreement. The Investment Management Agreement will be made available to qualified bidders post Phase II evaluation. 19
  • SECTION VII. QUESTIONAIRES COMMONWEALTH OF MASSACHUSETTS IRC 457 DEFERRED COMPENSATION PLAN INVESTMENT SERVICES SERVICES BEING PROPOSED (CHECK THE APPROPRIATE BOXES): INVESTMENT SERVICES: _____ ACTIVELY MANAGED DOMESTIC EQUITY LARGE CAP VALUE _____ ACTIVELY MANAGED LARGE CAP CORE EQUITY _____ ACTIVELY MANAGED GROWTH FIRM NAME: ADDRESS: TELEPHONE #: FACSIMILE #: E-MAIL ADDRESS: CLIENT CONTACT: SIGNED: Name (print): Title: Date: 20
  • A. GENERAL QUESTIONAIRE (ALL PROPOSERS MUST RESPOND TO THIS SECTION) 1. Indicate your firm’s fiduciary classification: Bank Insurance Company Registered Investment Advisor Affiliate of Fiduciary Other: 2. Give a brief history of the firm including: a. The month and year of SEC 1940 Act registration, b. The month and year the firm began providing the subject services to clients. 3. Describe the ownership of the firm, including but not limited to: a. Ownership structure including the percentage owned by current active employees and the number of employees participating in such ownership, b. Parent, subsidiary, or affiliated companies, or joint ventures, c. If a subsidiary or affiliate, designate the percentage of parent firm’s total revenue generated by your organization, d. If the firm is a joint venture partner, identify the percentage of ownership and revenues recognized by each partner to the combined association, e. How firm is capitalized, f. Percent of total revenue derived from providing the subject services, and g. Percent of total revenue derived from other businesses. 4. Provide an organizational chart diagramming the relationships between the professional staff as well as the parent-subsidiary, affiliate, joint venture entities, or sub-advisory relationships. 5. Provide the location and functions of each of your firm’s offices in the following format: Location Function No. of Professionals 6. Describe the levels (U.S. dollar amounts) of coverage for SEC-required (17g-1) fidelity bonds, errors and omissions coverage and any other fiduciary coverage, which your firm carries. List the insurance carriers supplying the coverage. 7. Is your organization duly licensed to do business in Massachusetts? If not, please append an opinion of counsel giving their opinion as to whether they anticipate any difficulties in obtaining all necessary Massachusetts licenses for your company. 21
  • 8. Disclose any business relationship with Wilshire Associates. 9. Describe the material developments in your organization (changes in ownership, personnel, business, etc.) over the past three years in detail. 10. Describe any plans and arrangements in place for an alternative worksite should your facilities become inoperative because of fire, earthquake, etc. 11. Describe your firm’s overall business strengths, weaknesses and competitive advantages. SECTION VIII. INVESTMENT SERVICES QUESTIONNAIRE Provide a response to the questionnaire for each applicable investment product. Along with the questionnaire for each product, ensure that Section VII, A, GENERAL QUESTIONAIRE is answered. For each category, a proposal of one fund product is preferable, but a provider should in no case bid for more than two funds products per category. For example, you may provide up to two proposed products for the active international equity fund, but one is preferred. 1) ***Active Large Cap Value Product Questionnaire*** a. Fund Name: b. Advisor Name/Sub-advisor Name: c. Fund Type (Mutual, Commingled, Collective Trust, Separate Account): d. Share Class (if applicable): e. Valuation Frequency: f. Inception date (oldest share class): g. Advisor/Sub-advisor tenure with fund (if different than inception date): A. ASSETS UNDER MANAGEMENT 12/31 12/31 12/31 12/31 12/31 6/30 1999 2000 2001 2002 2003 2004 1. (a) Total assets under management (all products) ($millions) (b) Total (taxable & non-taxable) active large cap value assets ($ millions) (c) Total assets (retail & institutional) managed in the subject product ($ millions) 22
  • (d) Total institutional assets (taxable & non-taxable) managed in the subject product ($ millions) (e) Total assets managed in the subject product for U.S. tax-exempt clients in separate accounts ($ millions) Accounts (f) Total U.S. tax exempt assets in the subject product in commingled funds ($ millions) 2. a. Please list 5 largest U.S. tax-exempt accounts currently managed, including all public and ERISA fund clients, invested in the subject product. Name Date of Inception Market Value (6/30/04) 3. List all clients and asset amounts gained in the subject product over the past three years as of June 30, 2004. 4. List all clients and asset amounts lost in the subject product over the past three years as of June 30, 2004. 5. What is the minimum account size you will accept on a separate account basis? 6. Describe whether or not there have been any issues with respect to market timing in this or other active large cap value commingled funds offered by your firm. Describe how market timing is prevented in the commingled fund. 7. Describe the objectives of your firm with respect to future growth in the product, commenting on:  Additional resources for portfolio management, research, trading, client service and tools/ models to enhance the investment process or manage growth; and,  Size limitations with respect to assets under management in the product. How did you arrive at those asset limits? Are companion retail mutual fund assets and assets in this category from broader mandates included in these limits? Describe. 8. Identify three clients that have terminated accounts in the subject product over the past three years that can be contacted as references. Provide the firm name, contact person and title, phone number, product name, fund account value and reason for termination. 23
  • 9. Provide the client name, address, phone number, contact name, title, and account type (e.g. defined benefit, defined contribution, endowment) of three accounts, who are invested in the subject product that can be contacted as references. Also indicate the length of your relationship and assets under management for each reference. 10. What is the optimum total asset size and number of client accounts for this investment product? Why? At what total asset size for the subject product do you intend to cease accepting more business? What advantages and disadvantages does your current size present to achieving superior performance results in the future. 24
  • B. PEOPLE/ORGANIZATION 1. How many portfolio managers are employed in the product? How many research analysts support this product? Please specify locations, state the number of accounts each manages and include the dollar value of assets under management. Indicate those associated with U.S. tax-exempt accounts. 2. Provide a list of the professionals involved in the subject product in the manner listed below: PORTFOLIO MANAGEMENT Title/ Yrs Yrs @ Degrees/ Sponsoring Name Responsibilities Exp Firm Designations Body/School RESEARCH Title/ Yrs Yrs @ Degrees/ Sponsoring Name Responsibilities Exp Firm Designations Body/School TRADING Title/ Yrs Yrs @ Degrees/ Sponsoring Name Responsibilities Exp Firm Designations Body/School 3. Describe your internal training procedures for portfolio managers, traders, and research analysts. 4. Describe the background of professionals directly involved in the management of the product.  Are they brought in from the outside or promoted to their positions from within the organization?  Is their prior experience in portfolio management/research/trading, industry, consulting, or other business or technical areas?  What sort of ongoing education programs (for example, the CFA program) are encouraged or required? 5. Describe the job qualifications required by your firm when hiring: portfolio managers, traders, research analysts, and system professionals. 6. What personnel or organizational improvements are planned over the next years? 7. Provide biographies of no longer than one page on each of the persons listed in Question C.2. Please include prior employment history. 8. Provide an organizational chart that diagrams the different functions (research, trading, etc.) dedicated to the product area. Professionals should be identified over their areas of responsibility. 9. Describe the compensation and incentive program for professionals directly involved in the product. How are they evaluated and rewarded? What incentives are provided to attract and retain superior individuals?  Identify the percentage of compensation which is:  Base salary  Performance bonus  Equity incentives 25
  •  Other  Do you offer direct ownership, phantom stock, profit sharing, and/or performance bonus?  Who is eligible to participate?  On what basis are these incentives determined – is compensation tied to success factors such as asset growth, performance, or other factors? Please list and indicate the weight of each in determining total compensation.  How does your compensation structure/levels compare with other firms in the industry? 10. Discuss the causes and impact of any turnover (departures or hiring/promotions) of any professionals directly involved in the product you have experienced in the past five years. How long has the team been together? Indicate when and why any professional dedicated to the product left or joined the firm in the past three years. Describe their job responsibilities. For personnel who have left indicate job titles and years with the firm and who replaced them. JOINED Date Name/Title Responsibilities DEPARTED Yrs @ Replaced by Date Name/Title Responsibilities Firm Reason for leaving (name/title) 26
  • C. INVESTMENT PHILOSOPHY, POLICY AND PROCESS 1. Describe your firm’s investment philosophy for the active large cap value product.  What market anomaly or inefficiency are you trying to capture?  Why do you believe this philosophy will be successful in the future? Provide any evidence or research, which supports this belief.  How has this philosophy changed over time?  How do you define the product’s style? 2. What do you think is the appropriate benchmark to use for the subject product and why? Is this the one your firm is using for the subject product? 3. Describe the sources and processing of information used to select securities.  Are you seeking unique sources of information?  Are you applying unique methods to process the information?  What percent of resources and time does your firm devote to the top-down (macroeconomic and industry analysis) aspect of your approach versus the bottom-up (security selection) aspect? 4. Describe your buy/sell disciplines.  What market capitalization and liquidity criteria meet the requirements of your buy/sell discipline? Describe any limits on market capitalization ranges in the portfolio.  What valuation approaches are used in evaluating stocks?  What specific fundamental factors (P/B, P/E, earnings, growth, ROE, etc.) are integral to the stock selection process? What is the relative importance of these factors?  What factors dictate your sell decisions?  Under what circumstances would your firm deviate from these disciplines? Have you ever deviated? If so, please describe. 5. Describe your portfolio construction process.  What is the universe from which securities are selected?  What types of securities are used (common, preferred, convertible, ADRs, etc.)?  Describe in detail your use and frequency of use of derivative securities. Include discussion of how the use of such securities is consistent with your approach, the advantages, potential risks, risk controls, and your expertise with these securities.  How many issues are typically contained in a portfolio?  What is the average market cap of a portfolio?  What is the average P/E ratio of a portfolio?  How are individual sector and security weightings determined?  Discuss the quantitative and qualitative processes utilized.  What latitude is given to portfolio managers within the product team? Who has the ultimate decision making authority and accountability?  How important is benchmark-tracking error in the portfolio construction? Is it measured and managed? If so, how? 6. How is portfolio risk managed and monitored? Describe all risk management functions and tools utilized.  What is your firm's definition of risk with respect to this product? If more than one, specify each with its percentage of importance.  Describe how you monitor and manage:  Residual risk versus the benchmark  Common factor analysis  Security, sector, and industry weightings, and  Value at risk  Do you use cash as a method of risk control? Indicate how much cash is generally held in the portfolio. 27
  •  Describe any risk measurement models (such as BARRA, etc.) used and how this analysis is incorporated in the portfolio management process. 7. How do you monitor the product’s adherence to its investment style and process? Specify who is responsible. 8. Provide your internal guidelines for the subject product under a fully discretionary basis. Include the following:  Maximum sector and security exposures.  Types of securities used (common, preferred, convertible, currency derivatives, etc).  Market capitalization ranges by sector and security.  Expected level of annualized outperformance over three to five years relative to the large cap index chosen. 9. If you have internal research capability, which is dedicated to the product, describe the research process.  What percentage of the research effort is conducted internally?  Where is the research carried out?  What are the sources of research?  What specific research is conducted?  What are the outputs of the research?  How is this information incorporated in the stock selection and portfolio construction process? 10. If you use external research in the management of the product, describe the external research.  What percentage of the research effort is from external sources?  What are the sources of external research?  What specific research is acquired from external sources?  How is this information incorporated in the stock selection and portfolio construction process? 11. Describe the quantitative models and tools you utilize for research, portfolio construction and trading. What enhancements are being contemplated? 12. Describe your firm’s trading capabilities related to this product. Provide a description of your trading platform, including systems (proprietary and off-the-shelf) for execution and processing.  Describe the allocation objectives and implementation procedures across all accounts. What is the process by which trades are allocated across separate accounts as opposed to commingled accounts? Please describe both the tactic of allocating the initial trade as well as the strategy of building positions across accounts.  What has been the product’s level of turnover?  Is trading segmented by investment product platform?  How many traders are there and what is their experience?  Describe the trading systems and strategies you use, and indicate any enhancements your firm is contemplating.  What steps have you taken to automate the trade flow process? What areas are still handled manually?  How do you leverage your infrastructure to ensure firm-wide collaboration in execution (broker/ dealer relationships) and capital market conditions (liquidity)? How does your firm manage and monitor market liquidity?  Describe how you measure trading costs (commissions and market impact).  Describe your firm’s policy regarding the use of soft dollars.  If your firm is affiliated with a broker/dealer, describe whether or not you trade through this affiliated brokerage.  Discuss your internal monitoring process for final price determination and trade order management. Do you have dedicated committees overseeing these functions? If so, please list the members. 28
  •  What processes do you have in place for ensuring pre- and post-trade guideline compliance? What functions are automated? What process do you have in place for human verification? Who signs off on final trading?  Please describe the oversight procedures that would minimize the risk of traders acting outside of their given latitude in executing trades. 13. What is the maximum percentage of total annual security trades that clients can direct without impeding your overall investment performance? Explain. 14. If you have soft dollar relationships with broker-dealers, please disclose the following:  Soft dollar policy and when last reviewed.  Percentage of trades executed tied to soft dollar relationships.  List of resources funded by soft dollars that would normally be funded with hard dollars. 15. Describe what circumstances or market conditions would favor the subject product’s strategy? When can it be expected to be out of phase or be unrewarded? 16. Are you able to provide accurate, audited asset and transaction statements within 2-3 weeks of month's end? Explain. 17. What unique attributes does your firm or your product have which distinguish it from its competitors in the fulfillment of this assignment? 29
  • D. OPERATIONS/BACK-OFFICE 1. How many back office operations professionals support the subject product? Please specify locations. 2. Provide a list of the professionals involved in the subject product in the manner listed below: BACK OFFICE OPERATIONS Title/ Yrs Yrs @ Degrees/ Sponsoring Name Responsibilities Exp Firm Designations Body/School 3. Describe your internal training procedures for professionals on the back office operations team. 4. Describe the background of operations professionals that support the product.  Are they brought in from the outside or promoted to their positions from within the organization?  Is their prior experience in operations or other business or technical areas?  What sort of ongoing education programs (for example, CPA, CFA) are encouraged or required? 5. Describe the job qualifications required by your firm when hiring operations professionals. 6. What personnel or organizational improvements are planned over the next years? 7. Provide biographies of no longer than one page on each of the persons listed in Question 2. Please include prior employment history. 8. Provide an organizational chart that diagrams the different operations functions dedicated to the product area. Professionals should be identified over their areas of responsibility. 9. Describe the compensation and incentive program for operations professionals directly involved in the product. How are they evaluated and rewarded? What incentives are provided to attract and retain superior individuals?  Identify the percentage of compensation which is:  Base salary  Performance bonus  Equity incentives  Other  Do you offer direct ownership, phantom stock, profit sharing, and/or performance bonus?  Who is eligible to participate?  On what basis are these incentives determined – is compensation tied to success factors such as asset growth, performance, or other factors? Please list and indicate the weight of each in determining total compensation.  How does your compensation structure compare with other firms in the industry? 10. Discuss the causes and impact of any turnover (departures or hiring/promotions) of any operations professionals directly involved in the product you have experienced in the past five years. How long has the team been together? Indicate when and why any operations professional dedicated to the product left or joined the firm in the past three years. Describe their job responsibilities. For personnel who have left indicate job titles and years with the firm and who replaced them. JOINED Date Name/Title Responsibilities 30
  • DEPARTED Yrs @ Replaced by Date Name/Title Responsibilities Firm Reason for leaving (name/title) 31
  • E. COMPLIANCE/INTERNAL CONTROL STRUCTURE 1. Provide a detailed summary of your firm’s compliance regime. Identify senior or key personnel in the firm’s compliance process. 2. Does your firm maintain a code of ethics? If so, please attach. 3. During the past five years, has the firm been subject to any governmental regulatory or law enforcement agency’s investigation, examination, or other proceeding directly involving the firm, its owners, or employees other than such examination or other proceedings as are routinely conducted in the ordinary course of the firm’s business? 4. During the past five years, has the firm been subject to any litigation alleging fraud, breach of fiduciary duty, or other willful misconduct? 5. Provide a detailed summary of your firm’s internal control structure. Does the firm conduct periodic risk assessment? Provide a copy of SAS 70 if available, or other internal control review documentation, preferably prepared by an independent third party. 6. Provide copies of the firm’s most recent audited financial statements and auditor’s management letter. 7. Has your firm ever violated a client guideline? If so, please describe the violation and the resolution. 32
  • F. PERFORMANCE (Simulated results are not acceptable.) 1. a. Provide annual performance on a total return basis GROSS OF ALL FEES AND MANAGEMENT COSTS from inception for the subject product. Indicate if returns are net or gross of custody costs. Use AIMR standards or, if different, indicate explicitly how they differ. Indicate whether the subject performance is the composite performance or that of the commingled account vehicle. Please complete the both tables below. YOU MUST COMPLETE THE 2 TABLES BELOW OR YOUR SUBMISSION MAY NOT BE PROCESSED. TABLE#1 Active Large Cap Value Product Performance 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 Quarter 1 Quarter 2 Quarter 3 Quarter 4 N/A Total Return ___% ___% ___% ___% ___% ___% ___% ___% ___% ___% Russell 1000 Index ___% ___% ___% ___% ___% ___% ___% ___% ___% ___% Difference ___% ___% ___% ___% ___% ___% ___% ___% ___% ___% TABLE #2 1 Year 3 Years 5 Years 10 Years Annualized Ended Ended Ended Ended Returns 6/30/04 6/30/04 6/30/04 6/30/04 Return _______% _______% _______% _______% Russell 1000 Index _______% _______% _______% _______% Difference _______% _______% _______% _______% Provide peer group rankings on an annualized and calendar year basis for the performance listed above. Please also provide a description of the peer group. 33
  • 1. Provide underlying data for performance given in question F1(a), if applicable: 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 Assets in Composite Number of Accts High Return Median Return Low Return 2. a. Describe causes for investment return deviation (both positive and negative) from the stated benchmark return by calendar year. In the attribution analysis identify contributions of stock and sector selection. 2004 2003 2002 2001 2000 1999 ______ Stock Selection ______ Industry/Sector Selection ______ Other (specify) ______ Total Difference b. Was the attribution analysis calculated internally or externally? If internal, please describe in detail the methodology used; if external, please name your vendor. H. CLIENT SERVICE 1. Which of your firm’s offices would service this account? What services would specifically be provided by which office? 2. Who will be the client service officer? How often could the person be available for client meetings? How often could the portfolio manager, chief investment officer and/or firm president be available for client meetings? I. SAMPLE PORTFOLIO Please submit a sample portfolio (preferably an actual portfolio) as of June 30, 2004, which would reflect the investment style of the product proposed for this account. J. WILSHIRE DATABASE Please ensure that your product information is updated in the Wilshire Odyssey database. If your product is not already included in the Wilshire Odyssey database, please contact Chris Tessman at ctessman@wilshire.com or (310)260-7262. 34
  • 2) ***Active Large Cap Core Product Questionnaire*** a. Fund Name: b. Advisor Name/Sub-advisor Name: c. Fund Type (Mutual, Commingled, Collective Trust, Separate Account): d. Share Class (if applicable): e. Valuation Frequency: f. Inception date (oldest share class): g. Advisor/Sub-advisor tenure with fund (if different than inception date): A. ASSETS UNDER MANAGEMENT 12/31 12/31 12/31 12/31 12/31 6/30 1999 2000 2001 2002 2003 2004 1. (a) Total assets under management (all products) ($millions) (b) Total (taxable & non-taxable) active large cap core assets ($ millions) (c) Total assets (retail & institutional) managed in the subject product ($ millions) (d) Total institutional assets (taxable & non-taxable) managed in the subject product ($ millions) (e) Total assets managed in the subject product for U.S. tax-exempt clients in separate accounts ($ millions) Accounts (f) Total U.S. tax exempt assets in the subject product in commingled funds ($ millions) 2. a. Please list 5 largest U.S. tax-exempt accounts currently managed, including all public and ERISA fund clients, invested in the subject product. Name Date of Inception Market Value (6/30/04) 35
  • 3.List all clients and asset amounts gained in the subject product over the past three years as of June 30, 2004. 4. List all clients and asset amounts lost in the subject product over the past three years as of June 30, 2004. 5. What is the minimum account size you will accept on a separate account basis? 6. Describe whether or not there have been any issues with respect to market timing in this or other active large cap core commingled funds offered by your firm. Describe how market timing is prevented in the commingled fund. 7. Describe the objectives of your firm with respect to future growth in the product, commenting on:  Additional resources for portfolio management, research, trading, client service and tools/ models to enhance the investment process or manage growth; and,  Size limitations with respect to assets under management in the product. How did you arrive at those asset limits? Are companion retail mutual fund assets and assets in this category from broader mandates included in these limits? Describe. 8. Identify three clients that have terminated accounts in the subject product over the past three years that can be contacted as references. Provide the firm name, contact person and title, phone number, product name, fund account value and reason for termination. 9. Provide the client name, address, phone number, contact name, title, and account type (e.g. defined benefit, defined contribution, endowment) of three accounts, who are invested in the subject product that can be contacted as references. Also indicate the length of your relationship and assets under management for each reference. 10. What is the optimum total asset size and number of client accounts for this investment product? Why? At what total asset size for the subject product do you intend to cease accepting more business? What advantages and disadvantages does your current size present to achieving superior performance results in the future. 36
  • C. PEOPLE/ORGANIZATION 1. How many portfolio managers are employed in the product? How many research analysts support this product? Please specify locations, state the number of accounts each manages and include the dollar value of assets under management. Indicate those associated with U.S. tax-exempt accounts. 2. Provide a list of the professionals involved in the subject product in the manner listed below: PORTFOLIO MANAGEMENT Title/ Yrs Yrs @ Degrees/ Sponsoring Name Responsibilities Exp Firm Designations Body/School RESEARCH Title/ Yrs Yrs @ Degrees/ Sponsoring Name Responsibilities Exp Firm Designations Body/School TRADING Title/ Yrs Yrs @ Degrees/ Sponsoring Name Responsibilities Exp Firm Designations Body/School 3. Describe your internal training procedures for portfolio managers, traders, and research analysts. 4. Describe the background of professionals directly involved in the management of the product.  Are they brought in from the outside or promoted to their positions from within the organization?  Is their prior experience in portfolio management/research/trading, industry, consulting, or other business or technical areas?  What sort of ongoing education programs (for example, the CFA program) are encouraged or required? 5. Describe the job qualifications required by your firm when hiring: portfolio managers, traders, research analysts, and system professionals. 6. What personnel or organizational improvements are planned over the next years? 7. Provide biographies of no longer than one page on each of the persons listed in Question C.2. Please include prior employment history. 8. Provide an organizational chart that diagrams the different functions (research, trading, etc.) dedicated to the product area. Professionals should be identified over their areas of responsibility. 9. Describe the compensation and incentive program for professionals directly involved in the product. How are they evaluated and rewarded? What incentives are provided to attract and retain superior individuals?  Identify the percentage of compensation which is:  Base salary  Performance bonus  Equity incentives 37
  •  Other  Do you offer direct ownership, phantom stock, profit sharing, and/or performance bonus?  Who is eligible to participate?  On what basis are these incentives determined – is compensation tied to success factors such as asset growth, performance, or other factors? Please list and indicate the weight of each in determining total compensation.  How does your compensation structure/levels compare with other firms in the industry? 10. Discuss the causes and impact of any turnover (departures or hiring/promotions) of any professionals directly involved in the product you have experienced in the past five years. How long has the team been together? Indicate when and why any professional dedicated to the product left or joined the firm in the past three years. Describe their job responsibilities. For personnel who have left indicate job titles and years with the firm and who replaced them. JOINED Date Name/Title Responsibilities DEPARTED Yrs @ Replaced by Date Name/Title Responsibilities Firm Reason for leaving (name/title) 38
  • C. INVESTMENT PHILOSOPHY, POLICY AND PROCESS 1. Describe your firm’s investment philosophy for the active large cap core product.  What market anomaly or inefficiency are you trying to capture?  Why do you believe this philosophy will be successful in the future? Provide any evidence or research, which supports this belief.  How has this philosophy changed over time?  How do you define the product’s style? 1. What do you think is the appropriate benchmark to use for the subject product and why? Is this the one your firm is using for the subject product? 3. Describe the sources and processing of information used to select securities.  Are you seeking unique sources of information?  Are you applying unique methods to process the information?  What percent of resources and time does your firm devote to the top-down (macroeconomic and industry analysis) aspect of your approach versus the bottom-up (security selection) aspect? 4. Describe your buy/sell disciplines.  What market capitalization and liquidity criteria meet the requirements of your buy/sell discipline? Describe any limits on market capitalization ranges in the portfolio.  What valuation approaches are used in evaluating stocks?  What specific fundamental factors (P/B, P/E, earnings, growth, ROE, etc.) are integral to the stock selection process? What is the relative importance of these factors?  What factors dictate your sell decisions?  Under what circumstances would your firm deviate from these disciplines? Have you ever deviated? If so, please describe. 1. Describe your portfolio construction process.  What is the universe from which securities are selected?  What types of securities are used (common, preferred, convertible, ADRs, etc.)?  Describe in detail your use and frequency of use of derivative securities. Include discussion of how the use of such securities is consistent with your approach, the advantages, potential risks, risk controls, and your expertise with these securities.  How many issues are typically contained in a portfolio?  What is the average market cap of a portfolio?  What is the average P/E ratio of a portfolio?  How are individual sector and security weightings determined?  Discuss the quantitative and qualitative processes utilized.  What latitude is given to portfolio managers within the product team? Who has the ultimate decision making authority and accountability?  How important is benchmark-tracking error in the portfolio construction? Is it measured and managed? If so, how? 6. How is portfolio risk managed and monitored? Describe all risk management functions and tools utilized.  What is your firm's definition of risk with respect to this product? If more than one, specify each with its percentage of importance.  Describe how you monitor and manage:  Residual risk versus the benchmark  Common factor analysis  Security, sector, and industry weightings, and  Value at risk  Do you use cash as a method of risk control? Indicate how much cash is generally held in the portfolio. 39
  •  Describe any risk measurement models (such as BARRA, etc.) used and how this analysis is incorporated in the portfolio management process. 7. How do you monitor the product’s adherence to its investment style and process? Specify who is responsible. 8. Provide your internal guidelines for the subject product under a fully discretionary basis. Include the following:  Maximum sector and security exposures.  Types of securities used (common, preferred, convertible, currency derivatives, etc).  Market capitalization ranges by sector and security.  Expected level of annualized outperformance over three to five years relative to the large cap index chosen. 9. If you have internal research capability, which is dedicated to the product, describe the research process.  What percentage of the research effort is conducted internally?  Where is the research carried out?  What are the sources of research?  What specific research is conducted?  What are the outputs of the research?  How is this information incorporated in the stock selection and portfolio construction process? 10. If you use external research in the management of the product, describe the external research.  What percentage of the research effort is from external sources?  What are the sources of external research?  What specific research is acquired from external sources?  How is this information incorporated in the stock selection and portfolio construction process? 11. Describe the quantitative models and tools you utilize for research, portfolio construction and trading. What enhancements are being contemplated? 12. Describe your firm’s trading capabilities related to this product. Provide a description of your trading platform, including systems (proprietary and off-the-shelf) for execution and processing.  Describe the allocation objectives and implementation procedures across all accounts. What is the process by which trades are allocated across separate accounts as opposed to commingled accounts? Please describe both the tactic of allocating the initial trade as well as the strategy of building positions across accounts.  What has been the product’s level of turnover?  Is trading segmented by investment product platform?  How many traders are there and what is their experience?  Describe the trading systems and strategies you use, and indicate any enhancements your firm is contemplating.  What steps have you taken to automate the trade flow process? What areas are still handled manually?  How do you leverage your infrastructure to ensure firm-wide collaboration in execution (broker/ dealer relationships) and capital market conditions (liquidity)? How does your firm manage and monitor market liquidity?  Describe how you measure trading costs (commissions and market impact).  Describe your firm’s policy regarding the use of soft dollars.  If your firm is affiliated with a broker/dealer, describe whether or not you trade through this affiliated brokerage.  Discuss your internal monitoring process for final price determination and trade order management. Do you have dedicated committees overseeing these functions? If so, please list the members. 40
  •  What processes do you have in place for ensuring pre- and post-trade guideline compliance? What functions are automated? What process do you have in place for human verification? Who signs off on final trading?  Please describe the oversight procedures that would minimize the risk of traders acting outside of their given latitude in executing trades. 13. What is the maximum percentage of total annual security trades that clients can direct without impeding your overall investment performance? Explain. 14. If you have soft dollar relationships with broker-dealers, please disclose the following:  Soft dollar policy and when last reviewed.  Percentage of trades executed tied to soft dollar relationships.  List of resources funded by soft dollars that would normally be funded with hard dollars. 15. Describe what circumstances or market conditions would favor the subject product’s strategy? When can it be expected to be out of phase or be unrewarded? 16. Are you able to provide accurate, audited asset and transaction statements within 2-3 weeks of month's end? Explain. 17. What unique attributes does your firm or your product have which distinguish it from its competitors in the fulfillment of this assignment? 41
  • D. OPERATIONS/BACK-OFFICE 1. How many back office operations professionals support the subject product? Please specify locations. 2. Provide a list of the professionals involved in the subject product in the manner listed below: BACK OFFICE OPERATIONS Title/ Yrs Yrs @ Degrees/ Sponsoring Name Responsibilities Exp Firm Designations Body/School 3. Describe your internal training procedures for professionals on the back office operations team. 4. Describe the background of operations professionals that support the product.  Are they brought in from the outside or promoted to their positions from within the organization?  Is their prior experience in operations or other business or technical areas?  What sort of ongoing education programs (for example, CPA, CFA) are encouraged or required? 5. Describe the job qualifications required by your firm when hiring operations professionals. 6. What personnel or organizational improvements are planned over the next years? 7. Provide biographies of no longer than one page on each of the persons listed in Question 2. Please include prior employment history. 8. Provide an organizational chart that diagrams the different operations functions dedicated to the product area. Professionals should be identified over their areas of responsibility. 9. Describe the compensation and incentive program for operations professionals directly involved in the product. How are they evaluated and rewarded? What incentives are provided to attract and retain superior individuals?  Identify the percentage of compensation which is:  Base salary  Performance bonus  Equity incentives  Other  Do you offer direct ownership, phantom stock, profit sharing, and/or performance bonus?  Who is eligible to participate?  On what basis are these incentives determined – is compensation tied to success factors such as asset growth, performance, or other factors? Please list and indicate the weight of each in determining total compensation.  How does your compensation structure compare with other firms in the industry? 10. Discuss the causes and impact of any turnover (departures or hiring/promotions) of any operations professionals directly involved in the product you have experienced in the past five years. How long has the team been together? Indicate when and why any operations professional dedicated to the product left or joined the firm in the past three years. Describe their job responsibilities. For personnel who have left indicate job titles and years with the firm and who replaced them. JOINED Date Name/Title Responsibilities 42
  • DEPARTED Yrs @ Replaced by Date Name/Title Responsibilities Firm Reason for leaving (name/title) 43
  • E. COMPLIANCE/INTERNAL CONTROL STRUCTURE 1. Provide a detailed summary of your firm’s compliance regime. Identify senior or key personnel in the firm’s compliance process. 2. Does your firm maintain a code of ethics? If so, please attach. 3. During the past five years, has the firm been subject to any governmental regulatory or law enforcement agency’s investigation, examination, or other proceeding directly involving the firm, its owners, or employees other than such examination or other proceedings as are routinely conducted in the ordinary course of the firm’s business? 4. During the past five years, has the firm been subject to any litigation alleging fraud, breach of fiduciary duty, or other willful misconduct? 5. Provide a detailed summary of your firm’s internal control structure. Does the firm conduct periodic risk assessment? Provide a copy of SAS 70 if available, or other internal control review documentation, preferably prepared by an independent third party. 6. Provide copies of the firm’s most recent audited financial statements and auditor’s management letter. 7. Has your firm ever violated a client guideline? If so, please describe the violation and the resolution. 44
  • F. PERFORMANCE (Simulated results are not acceptable.) 1. a. Provide annual performance on a total return basis GROSS OF ALL FEES AND MANAGEMENT COSTS from inception for the subject product. Indicate if returns are net or gross of custody costs. Use AIMR standards or, if different, indicate explicitly how they differ. Indicate whether the subject performance is the composite performance or that of the commingled account vehicle. Please complete the both tables below. YOU MUST COMPLETE THE 2 TABLES BELOW OR YOUR SUBMISSION MAY NOT BE PROCESSED. TABLE#1 Active Large Cap Core Product Performance 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 Quarter 1 Quarter 2 Quarter 3 Quarter 4 N/A Total Return ___% ___% ___% ___% ___% ___% ___% ___% ___% ___% S&P 500 Index ___% ___% ___% ___% ___% ___% ___% ___% ___% ___% Difference ___% ___% ___% ___% ___% ___% ___% ___% ___% ___% TABLE #2 1 Year 3 Years 5 Years 10 Years Annualized Ended Ended Ended Ended Returns 6/30/04 6/30/04 6/30/04 6/30/04 Return _______% _______% _______% _______% S&P 500 Index _______% _______% _______% _______% Difference _______% _______% _______% _______% Provide peer group rankings on an annualized and calendar year basis for the performance listed above. Please also provide a description of the peer group. 45
  • 1. Provide underlying data for performance given in question F1(a), if applicable: 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 Assets in Composite Number of Accts High Return Median Return Low Return 2. a. Describe causes for investment return deviation (both positive and negative) from the stated benchmark return by calendar year. In the attribution analysis identify contributions of stock and sector selection. 2004 2003 2002 2001 2000 1999 ______ Stock Selection ______ Industry/Sector Selection ______ Other (specify) ______ Total Difference b. Was the attribution analysis calculated internally or externally? If internal, please describe in detail the methodology used; if external, please name your vendor. H. CLIENT SERVICE 1. Which of your firm’s offices would service this account? What services would specifically be provided by which office? 2. Who will be the client service officer? How often could the person be available for client meetings? How often could the portfolio manager, chief investment officer and/or firm president be available for client meetings? I. SAMPLE PORTFOLIO Please submit a sample portfolio (preferably an actual portfolio) as of June 30, 2004, which would reflect the investment style of the product proposed for this account. J. WILSHIRE DATABASE Please ensure that your product information is updated in the Wilshire Odyssey database. If your product is not already included in the Wilshire Odyssey database, please contact Chris Tessman at ctessman@wilshire.com or (310)260-7262. 3) ***Active Growth Product Questionnaire*** 46
  • a. Fund Name: b. Advisor Name/Sub-advisor Name: c. Fund Type (Mutual, Commingled, Collective Trust, Separate Account): d. Share Class (if applicable): e. Valuation Frequency: f. Inception date (oldest share class): g. Advisor/Sub-advisor tenure with fund (if different than inception date): A. ASSETS UNDER MANAGEMENT 12/31 12/31 12/31 12/31 12/31 6/30 1999 2000 2001 2002 2003 2004 1. (a) Total assets under management (all products) ($millions) (b) Total (taxable & non-taxable) active all-cap growth assets ($ millions) (c) Total assets (retail & institutional) managed in the subject product ($ millions) (d) Total institutional assets (taxable & non-taxable) managed in the subject product ($ millions) (e) Total assets managed in the subject product for U.S. tax-exempt clients in separate accounts ($ millions) Accounts (f) Total U.S. tax exempt assets in the subject product in commingled funds ($ millions) 2. a. Please list 5 largest U.S. tax-exempt accounts currently managed, including all public and ERISA fund clients, invested in the subject product. Name Date of Inception Market Value (6/30/04) 47
  • 3. List all clients and asset amounts gained in the subject product over the past three years as of June 30, 2004. 4. List all clients and asset amounts lost in the subject product over the past three years as of June 30, 2004. 5. What is the minimum account size you will accept on a separate account basis? 6. Describe whether or not there have been any issues with respect to market timing in this or other active all-cap growth commingled funds offered by your firm. Describe how market timing is prevented in the commingled fund. 7. Describe the objectives of your firm with respect to future growth in the product, commenting on:  Additional resources for portfolio management, research, trading, client service and tools/models to enhance the investment process or manage growth; and,  Size limitations with respect to assets under management in the product. How did you arrive at those asset limits? Are companion retail mutual fund assets and assets in this category from broader mandates included in these limits? Describe. 8. Identify three clients that have terminated accounts in the subject product over the past three years that can be contacted as references. Provide the firm name, contact person and title, phone number, product name, fund account value and reason for termination. 9. Provide the client name, address, phone number, contact name, title, and account type (e.g. defined benefit, defined contribution, endowment) of three accounts, who are invested in the subject product that can be contacted as references. Also indicate the length of your relationship and assets under management for each reference. 10. What is the optimum total asset size and number of client accounts for this investment product? Why? At what total asset size for the subject product do you intend to cease accepting more business? What advantages and disadvantages does your current size present to achieving superior performance results in the future. 48
  • D. PEOPLE/ORGANIZATION 1. How many portfolio managers are employed in the product? How many research analysts support this product? Please specify locations, state the number of accounts each manages and include the dollar value of assets under management. Indicate those associated with U.S. tax-exempt accounts. 2. Provide a list of the professionals involved in the subject product in the manner listed below: PORTFOLIO MANAGEMENT Title/ Yrs Yrs @ Degrees/ Sponsoring Name Responsibilities Exp Firm Designations Body/School RESEARCH Title/ Yrs Yrs @ Degrees/ Sponsoring Name Responsibilities Exp Firm Designations Body/School TRADING Title/ Yrs Yrs @ Degrees/ Sponsoring Name Responsibilities Exp Firm Designations Body/School 3. Describe your internal training procedures for portfolio managers, traders, and research analysts. 4. Describe the background of professionals directly involved in the management of the product.  Are they brought in from the outside or promoted to their positions from within the organization?  Is their prior experience in portfolio management/research/trading, industry, consulting, or other business or technical areas?  What sort of ongoing education programs (for example, the CFA program) are encouraged or required? 5. Describe the job qualifications required by your firm when hiring: portfolio managers, traders, research analysts, and system professionals. 6. What personnel or organizational improvements are planned over the next years? 7. Provide biographies of no longer than one page on each of the persons listed in Question C.2. Please include prior employment history. 8. Provide an organizational chart that diagrams the different functions (research, trading, etc.) dedicated to the product area. Professionals should be identified over their areas of responsibility. 9. Describe the compensation and incentive program for professionals directly involved in the product. How are they evaluated and rewarded? What incentives are provided to attract and retain superior individuals?  Identify the percentage of compensation which is:  Base salary  Performance bonus  Equity incentives 49
  •  Other  Do you offer direct ownership, phantom stock, profit sharing, and/or performance bonus?  Who is eligible to participate?  On what basis are these incentives determined – is compensation tied to success factors such as asset growth, performance, or other factors? Please list and indicate the weight of each in determining total compensation.  How does your compensation structure/levels compare with other firms in the industry? 10. Discuss the causes and impact of any turnover (departures or hiring/promotions) of any professionals directly involved in the product you have experienced in the past five years. How long has the team been together? Indicate when and why any professional dedicated to the product left or joined the firm in the past three years. Describe their job responsibilities. For personnel who have left indicate job titles and years with the firm and who replaced them. JOINED Date Name/Title Responsibilities DEPARTED Yrs @ Replaced by Date Name/Title Responsibilities Firm Reason for leaving (name/title) 50
  • C. INVESTMENT PHILOSOPHY, POLICY AND PROCESS 1. Describe your firm’s investment philosophy for the active all-cap growth product.  What market anomaly or inefficiency are you trying to capture?  Why do you believe this philosophy will be successful in the future? Provide any evidence or research, which supports this belief.  How has this philosophy changed over time?  How do you define the product’s style? 1. What do you think is the appropriate benchmark to use for the subject product and why? Is this the one your firm is using for the subject product? 3. Describe the sources and processing of information used to select securities.  Are you seeking unique sources of information?  Are you applying unique methods to process the information?  What percent of resources and time does your firm devote to the top-down (macroeconomic and industry analysis) aspect of your approach versus the bottom-up (security selection) aspect? 4. Describe your buy/sell disciplines.  What market capitalization and liquidity criteria meet the requirements of your buy/sell discipline? Describe any limits on market capitalization ranges in the portfolio.  What valuation approaches are used in evaluating stocks?  What specific fundamental factors (P/B, P/E, earnings, growth, ROE, etc.) are integral to the stock selection process? What is the relative importance of these factors?  What factors dictate your sell decisions?  Under what circumstances would your firm deviate from these disciplines? Have you ever deviated? If so, please describe. 1. Describe your portfolio construction process.  What is the universe from which securities are selected?  What types of securities are used (common, preferred, convertible, ADRs, etc.)?  Describe in detail your use and frequency of use of derivative securities. Include discussion of how the use of such securities is consistent with your approach, the advantages, potential risks, risk controls, and your expertise with these securities.  How many issues are typically contained in a portfolio?  What is the average market cap of a portfolio?  What is the average P/E ratio of a portfolio?  How are individual sector and security weightings determined?  Discuss the quantitative and qualitative processes utilized.  What latitude is given to portfolio managers within the product team? Who has the ultimate decision making authority and accountability?  How important is benchmark-tracking error in the portfolio construction? Is it measured and managed? If so, how? 6. How is portfolio risk managed and monitored? Describe all risk management functions and tools utilized.  What is your firm's definition of risk with respect to this product? If more than one, specify each with its percentage of importance.  Describe how you monitor and manage:  Residual risk versus the benchmark  Common factor analysis  Security, sector, and industry weightings, and  Value at risk  Do you use cash as a method of risk control? Indicate how much cash is generally held in the portfolio. 51
  •  Describe any risk measurement models (such as BARRA, etc.) used and how this analysis is incorporated in the portfolio management process. 7. How do you monitor the product’s adherence to its investment style and process? Specify who is responsible. 8. Provide your internal guidelines for the subject product under a fully discretionary basis. Include the following:  Maximum sector and security exposures.  Types of securities used (common, preferred, convertible, currency derivatives, etc).  Expected level of annualized outperformance over three to five years relative to the all- cap index chosen. 9. What is the weighted average market capitalization of the subject product? What percentage of the holdings fall into the following capitalization ranges:  Greater than $10 Billion  Between $2 Billion and $10 Billion  Less than $2 Billion 10. If you have internal research capability, which is dedicated to the product, describe the research process.  What percentage of the research effort is conducted internally?  Where is the research carried out?  What are the sources of research?  What specific research is conducted?  What are the outputs of the research?  How is this information incorporated in the stock selection and portfolio construction process? 11. If you use external research in the management of the product, describe the external research.  What percentage of the research effort is from external sources?  What are the sources of external research?  What specific research is acquired from external sources?  How is this information incorporated in the stock selection and portfolio construction process? 12. Describe the quantitative models and tools you utilize for research, portfolio construction and trading. What enhancements are being contemplated? 13. Describe your firm’s trading capabilities related to this product. Provide a description of your trading platform, including systems (proprietary and off-the-shelf) for execution and processing.  Describe the allocation objectives and implementation procedures across all accounts. What is the process by which trades are allocated across separate accounts as opposed to commingled accounts? Please describe both the tactic of allocating the initial trade as well as the strategy of building positions across accounts.  What has been the product’s level of turnover?  Is trading segmented by investment product platform?  How many traders are there and what is their experience?  Describe the trading systems and strategies you use, and indicate any enhancements your firm is contemplating.  What steps have you taken to automate the trade flow process? What areas are still handled manually?  How do you leverage your infrastructure to ensure firm-wide collaboration in execution (broker/ dealer relationships) and capital market conditions (liquidity)? How does your firm manage and monitor market liquidity?  Describe how you measure trading costs (commissions and market impact).  Describe your firm’s policy regarding the use of soft dollars. 52
  •  If your firm is affiliated with a broker/dealer, describe whether or not you trade through this affiliated brokerage.  Discuss your internal monitoring process for final price determination and trade order management. Do you have dedicated committees overseeing these functions? If so, please list the members.  What processes do you have in place for ensuring pre- and post-trade guideline compliance? What functions are automated? What process do you have in place for human verification? Who signs off on final trading?  Please describe the oversight procedures that would minimize the risk of traders acting outside of their given latitude in executing trades. 14. What is the maximum percentage of total annual security trades that clients can direct without impeding your overall investment performance? Explain. 15. If you have soft dollar relationships with broker-dealers, please disclose the following:  Soft dollar policy and when last reviewed.  Percentage of trades executed tied to soft dollar relationships.  List of resources funded by soft dollars that would normally be funded with hard dollars. 16. Describe what circumstances or market conditions would favor the subject product’s strategy? When can it be expected to be out of phase or be unrewarded? 17. Are you able to provide accurate, audited asset and transaction statements within 2-3 weeks of month's end? Explain. 18. What unique attributes does your firm or your product have which distinguish it from its competitors in the fulfillment of this assignment? 53
  • D. OPERATIONS/BACK-OFFICE 1. How many back office operations professionals support the subject product? Please specify locations. 2. Provide a list of the professionals involved in the subject product in the manner listed below: BACK OFFICE OPERATIONS Title/ Yrs Yrs @ Degrees/ Sponsoring Name Responsibilities Exp Firm Designations Body/School 3. Describe your internal training procedures for professionals on the back office operations team. 4. Describe the background of operations professionals that support the product.  Are they brought in from the outside or promoted to their positions from within the organization?  Is their prior experience in operations or other business or technical areas?  What sort of ongoing education programs (for example, CPA, CFA) are encouraged or required? 5. Describe the job qualifications required by your firm when hiring operations professionals. 6. What personnel or organizational improvements are planned over the next years? 7. Provide biographies of no longer than one page on each of the persons listed in Question 2. Please include prior employment history. 8. Provide an organizational chart that diagrams the different operations functions dedicated to the product area. Professionals should be identified over their areas of responsibility. 9. Describe the compensation and incentive program for operations professionals directly involved in the product. How are they evaluated and rewarded? What incentives are provided to attract and retain superior individuals?  Identify the percentage of compensation which is:  Base salary  Performance bonus  Equity incentives  Other  Do you offer direct ownership, phantom stock, profit sharing, and/or performance bonus?  Who is eligible to participate?  On what basis are these incentives determined – is compensation tied to success factors such as asset growth, performance, or other factors? Please list and indicate the weight of each in determining total compensation.  How does your compensation structure compare with other firms in the industry? 10. Discuss the causes and impact of any turnover (departures or hiring/promotions) of any operations professionals directly involved in the product you have experienced in the past five years. How long has the team been together? Indicate when and why any operations professional dedicated to the product left or joined the firm in the past three years. Describe their job responsibilities. For personnel who have left indicate job titles and years with the firm and who replaced them. JOINED Date Name/Title Responsibilities 54
  • DEPARTED Yrs @ Replaced by Date Name/Title Responsibilities Firm Reason for leaving (name/title) 55
  • E. COMPLIANCE/INTERNAL CONTROL STRUCTURE 1. Provide a detailed summary of your firm’s compliance regime. Identify senior or key personnel in the firm’s compliance process. 2. Does your firm maintain a code of ethics? If so, please attach. 3. During the past five years, has the firm been subject to any governmental regulatory or law enforcement agency’s investigation, examination, or other proceeding directly involving the firm, its owners, or employees other than such examination or other proceedings as are routinely conducted in the ordinary course of the firm’s business? 4. During the past five years, has the firm been subject to any litigation alleging fraud, breach of fiduciary duty, or other willful misconduct? 5. Provide a detailed summary of your firm’s internal control structure. Does the firm conduct periodic risk assessment? Provide a copy of SAS 70 if available, or other internal control review documentation, preferably prepared by an independent third party. 6. Provide copies of the firm’s most recent audited financial statements and auditor’s management letter. 7. Has your firm ever violated a client guideline? If so, please describe the violation and the resolution. 56
  • F. PERFORMANCE (Simulated results are not acceptable.) 1. a. Provide annual performance on a total return basis GROSS OF ALL FEES AND MANAGEMENT COSTS from inception for the subject product. Indicate if returns are net or gross of custody costs. Use AIMR standards or, if different, indicate explicitly how they differ. Indicate whether the subject performance is the composite performance or that of the commingled account vehicle. Please complete the both tables below. YOU MUST COMPLETE THE 2 TABLES BELOW OR YOUR SUBMISSION MAY NOT BE PROCESSED. TABLE#1 Active All-Cap Growth Product Performance 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 Quarter 1 Quarter 2 Quarter 3 Quarter 4 N/A Total Return ___% ___% ___% ___% ___% ___% ___% ___% ___% ___% Russell 3000 ___% ___% ___% ___% ___% ___% ___% ___% ___% ___% Difference ___% ___% ___% ___% ___% ___% ___% ___% ___% ___% TABLE #2 1 Year 3 Years 5 Years 10 Years Annualized Ended Ended Ended Ended Returns 6/30/04 6/30/04 6/30/04 6/30/04 Return _______% _______% _______% _______% Russell 3000 Index _______% _______% _______% _______% Difference _______% _______% _______% _______% Provide peer group rankings on an annualized and calendar year basis for the performance listed above. Please also provide a description of the peer group. 57
  • b) Provide underlying data for performance given in question F1(a), if applicable: 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 Assets in Composite Number of Accts High Return Median Return Low Return 2. a. Describe causes for investment return deviation (both positive and negative) from the stated benchmark return by calendar year. In the attribution analysis identify contributions of stock and sector selection. 2004 2003 2002 2001 2000 1999 ______ Stock Selection ______ Industry/Sector Selection ______ Other (specify) ______ Total Difference b. Was the attribution analysis calculated internally or externally? If internal, please describe in detail the methodology used; if external, please name your vendor. H. CLIENT SERVICE 1. Which of your firm’s offices would service this account? What services would specifically be provided by which office? 2. Who will be the client service officer? How often could the person be available for client meetings? How often could the portfolio manager, chief investment officer and/or firm president be available for client meetings? I. SAMPLE PORTFOLIO Please submit a sample portfolio (preferably an actual portfolio) as of June 30, 2004, which would reflect the investment style of the product proposed for this account. J. WILSHIRE DATABASE Please ensure that your product information is updated in the Wilshire Odyssey database. If your product is not already included in the Wilshire Odyssey database, please contact Chris Tessman at ctessman@wilshire.com or (310)260-7262. IX. FEE PROPOSAL. 58
  • FIRM RFR Once a manager has been selected, negotiations of the fee may become necessary in order to account for the size of funding, the increments of funding, and any clarification. In no case will the negotiations result in a fee that is higher than the fee contained in the proposal. A. Proposed Fees 1. Complete the table below for all investment products proposed by your firm. Fees Total Fees Product Name Investment Mgt Admin 12B-1 Other Basis Points Vehicle & Fee2 Fee Fee Fee3 Share Class1 (Specify) Active Large Cap Value Active Large Cap Core Active Growth Total Fees 2, Are there any fee rebates available to the recordkeeper? Are there any other rebates that the recordkeeper is obtaining from the investment manager/funds? 1 Specify if the proposed investment vehicle is a individually managed separate account, institutional commingled fund, or mutual fund, etc. If mutual fund, specify and describe the share class. 2 Include fee schedule, if appropriate. 3 Specify the "other fee". "Other fees" should include, but not be limited to, fees associated with participants' transfer of account balances between investment options, including investment transfer expenses and any front end loads, contingent back-end loads, termination fees, redemption fees and surrender charges. In addition, any wrap fees or pricing charges for non-publicly traded assets should also be included. 59
  • Disclose all fee relationships with the Commonwealth’s current managers and/or current recordkeeper and complete the table below if applicable. Rebate to Recordkeeper Product Name Basis Points Dollars B. Do fees in A above include custody fees? If not, please specify. _______________________________________ _______________________ Name of Firm Date _______________________________________________ ____________________________ Signature Title 60
  • Attachment A REPRESENTATIONS AND WARRANTIES Compliance with all criteria listed below is mandatory in order for a bid to be accepted for further review. Lack of compliance will automatically disqualify the bidder. All respondents are required to submit an executed copy of the following Representations and Warranties. Specifically describe how your firm meets each applicable criteria listed below. Please explain instances when not applicable: A. Respondent warrants that it meets, or will meet before the award of the Contract, the bonding requirement provided by Section 412 of the Employment Retirement Income Security Act of 1974 (ERISA) or that it carries at least an equivalent fidelity bond that will be applicable to respondent's actions under that Contract (Provide a copy or proof of a fidelity bond indicating that all employees who perform work under the contract are covered, unless exempt, and an explanation of exemption is attached). B. Proposer warrants that it maintains an errors and omissions insurance policy providing a prudent amount of coverage for negligent acts or omissions and that such coverage will be applicable to proposer's actions under the Contract. C. Proposer warrants that it will not delegate its fiduciary responsibilities assumed under the Contract. D. A statement that the bidder meets all applicable state and federal requirements, and has all the licenses, registrations, filings, approvals, authorizations, consents or examinations required by a government or governmental authority to perform the Contract. E. Solvency- Certification that the bidder has not been in bankruptcy and/or receivership within the last three calendar years. F. Corporate Good Standing- If incorporated, identification of the bidder’s state of incorporation and a statement that it is in good standing in that state, and, if the state of incorporation is not Massachusetts, a statement that the bidder has complied with all filing requirements of the Massachusetts Secretary of State. G. Pending Litigation- Details of any pertinent judgment, criminal conviction, investigation or litigation pending against the bidder or any of its officers, directors, employees, agents, or subcontractors of which the bidder has knowledge or a statement that there are none. The Office of the State Treasurer and Receiver General reserves the right to reject a response based on this information. H. Compliance with RFR Requirements- A statement that the bidder agrees to meet every specification, requirement, or condition set forth in the RFR. (This statement will not be deemed to encompass any requirement, specification, or condition for which the RFR indicates that a preference may or will be given by the Office of the State Treasurer and Receiver General. Only a bidder seeking the preference must meet any such requirement, specification, or condition.) I. Cease and Desist- If selected for any services solicited through this RFR, the financial institution must agree to immediately notify the of any cease and desist order issued. J. Confidentiality- All materials and information provided to the Contractor by the State or acquired by 61
  • the Contractor on behalf of the State Treasurer’s Office shall be regarded as confidential information in accordance with Federal and State law, and ethical standards. The contractor must take all necessary steps to safeguard the confidentiality of such materials or information. K. Respondent warrants that it meets all of the minimum criteria applicable to the firm under this RFR as follows (Specifically describe how your firm meets the applicable minimum qualifications specified below. If Not Applicable please explain ): L. The candidate must be SEC-registered or exempt from registration with the nature of the exemption provided. The candidate must submit its full Form ADV (Parts I and II). M. The investment professionals must have the following performance history length in the product being proposed as of June 30, 2004. a) Active Large Cap Value: 5 Years b) Active Large Cap Core 5 Years c) Active Growth 5Years N. The investment professionals whose performance history is submitted must be the team responsible for the management of the Commonwealth’s account. O. The candidate must have at least three IRC 401K, 403B or 457 plans directly invested in the subject product being proposed, as of June 30, 2004. P. The candidate must have at least the following minimum assets (taxable & tax exempt) under management in the subject product being proposed: a) Active Large Cap Value: $1 billion b) Active Large Cap Core $1 billion c) Active Growth $1 billion _____________________ Name of Firm Date ___________________________________________ ______________________ Signature Title 62
  • Attachment B COMMONWEALTH OF MASSACHUSETTS DISCLOSURE STATEMENT FIRM: _________________________ ADDRESS: _________________________ _________________________ Firms seeking to provide investment management or consulting services (the “engagement”) to the Commonwealth of Massachusetts must complete a disclosure statement providing complete and accurate responses to the questions below. Firms selected to provide investment management or consulting services to the Commonwealth have a continuing obligation to update responses to these questions, in writing, immediately upon any change to such responses. The questions in this Disclosure Statement should be read broad, and any perceived ambiguity should be resolved in favor of disclosure. Any questions concerning the disclosures required should be directed to the Commonwealth. 1. Describe in detail your firm’s organization structure, and identify any controlling stockholders, parents, subsidiaries, affiliates, partners, general partners, or principals (all such individuals or entities hereinafter collectively referred to as the “firm.”) 2. Identify any relationship of the firm, its joint ventures, consultants, lobbyists, subcontractors, agents, or placement agents that relate in any way to the engagement. 3. Aside from the engagement, describe any services provided by the firm to the Commonwealth. 4. Aside from the services described in response to question no. 3, above, describe any services provided by the firm to the Office of the Treasurer or any trust, board, commission or authority of which the Treasurer is a member or trustee. (A list of such entities is attached as Exhibit II) 5. Aside from the services described in response to questions nos. 3 and 4, above, describe any services provided by the firm to the Commonwealth of Massachusetts or any of its political subdivisions. 6. Did or will the firm provide or share, agree to provide or share, or arrange to provide or share any compensation or benefit, direct or indirect, to any individual or entity for assisting the firm in: a) obtaining the engagement; or, b) performing the services required by the engagement. If the answer to question no. 6 is “yes,” provide for each the individual or entity a) the name and address of such individual or entity; b) a description of the assistance provided; and c) the compensation or benefit. 7. Does the firm have any ongoing relationship, arrangement or agreement with any individual or entity with respect to sharing compensation for services to: a) PRIM; b) any trust, board, commission, or authority of which the Treasurer is a member or trustee; or c) the Commonwealth of Massachusetts or its political subdivisions. 63
  • If the answer to question no. 7 is “yes,” provide for each such individual or entity a) the name and address of such individual or entity; b) a description of the relationship, arrangement or agreement; and, c) the compensation shared. Signed under the pains and penalties of this _______day of ________________, 2004. Name: __________________________________________ (print) Signature: __________________________________________ Title: __________________________________________ 64
  • Attachment C Mandatory Attachment Checklist (Complete and attach to the Cover Letter) Firm Name: ______________________________________ 1) Services Proposed (Please Check Appropriate Box): _____(1) Active Domestic Equity Large Cap Value _____(2) Active Large Cap Core _____(3) Active Growth 2) Mandatory items as detailed in Section V, subsection A (check appropriate box to insure item is completed and submitted) a) Questionnaire (section VII & VIII) Yes  (completed) b) Reps/Warranties (attachment A) Yes  (signed) c) Cover Letter* Yes  (signed) d) Disclosure Statement (attachment B) Yes  (signed) e) PERAC Disclosure (exhibit I) Yes  (signed) f) Fee Proposal (section IX) Yes  (signed) g) Commonwealth Terms & Conditions Yes  (signed) h) Standard Contract Form & Instructions Yes  (signed) i) Taxpayer Identification Number and Certification (W-9) Yes  (signed) j) Contractor Authorized Signature Verification Form Yes  (signed) k) Northern Ireland Notice and Certification Yes  (signed) l) Affirmative Market Program Plan Form (AMP) Yes  (signed) m) Affirmative Action Plan Form Yes  (signed) n) Consultant Contractor Mandatory Submission Form Yes  (signed) o) Business Reference Form Yes  (in addition to questionnaire info.) p) Tax Compliance Certification Form Yes  (certificate / proof of application) * Cover letter must be:  Signed by at least one individual who is authorized to bind the firm contractually * Cover letter must include:  The firm name  The firm address  The firm telephone/fax number/email address  The client contact  The title or position which the signer of the cover letter holds in the firm 65
  • Exhibit I PERAC Disclosure Please obtain the PERAC disclosure form at the following website, fill it out, and submit together with the COMMONWEALTH OF MASSACHUSETTS DISCLOSURE STATEMENT (Attachment B): http://www.state.ma.us/perac/forms/990202discstatement.pdf 66
  • Exhibit II TREASURER’S PRINCIPAL BOARDS. COMMISSIONS AND AUTHORITIES 1. Finance Advisory Board - M.G.L. c.6, §97-8 2. State Comptroller's Advisory Board - M.G.L. c.5A, §2 3. Investment Advisory Council - M.G.L. c.10, §5B 4. State Retirement Board - M.G.L. c.10, §18 5. State Lottery Commission - M.G.L. c.10, §23 6. Emergency Finance Board - M.G.L. c.10, §47 7. Board of Bank Incorporation - M.G.L. c.26, §5 8. Water Pollution Abatement Trust - M.G.L. c.29, §2 9. Pension Reserves Investment Management Board - M.G.L. c.32, §23(2A) 10. Massachusetts Convention Center Authority - Chapter 190 of the Acts of 1982 §§31-48 67
  • 68