CITY AND COUNTY OF SAN FRANCISCO DEFERRED COMPENSATION PLAN REQUEST FOR PROPOSALS FOR TARGET DATE FUND INVESTMENT MANAGEMENT SERVICES

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REQUEST FOR PROPOSAL –CITY AND COUNTY OF SAN FRANCISCO 457(B)DEFERRED COMPENSATION PLAN TARGET DATE FUND INVESTMENT MANAGEMENT SERVICES

2 City and County of San Francisco

457(b) Deferred Compensation Plan Request for Proposals for

Target Date Fund Investment Management Services

Table of Contents

I. Introduction II. Scope of Services

III. Submission Requirements IV. Evaluation and Selection Criteria V. Schedule

VI. Terms and Conditions for Receipt of Proposals VII. Contract Requirements

Appendices:

A. RFP Questions

B. Excel Spreadsheet – Summary of Information

C. Required Vendor Forms: Listing and Internet addresses of Forms related to Chapters 12B, 12C, and 14B of the S.F. Administrative Code, to Business Tax, and to Employer Identification Number.

D. Investment Management Agreement E. SFDCP Investment Policy Statement

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3 Request for Proposals for

Target Date Fund Investment Management Services for the City and County of San Francisco 457(b) Deferred Compensation Plan

I. Introduction

The City and County of San Francisco Deferred Compensation Plan (SFDCP) is soliciting proposals from qualified firms to provide Target Date Fund (TDF) Investment Management Services to the Retirement Board and staff of the City and County of San Francisco Employees’ Retirement System for the San Francisco 457(b) Deferred Compensation Plan (SFDCP).

SFDCP had $2.8 billion in assets as of June 30, 2015, including $574 million in 10 custom target date funds that were funded in April 2012. The custom TDFs serve as the Plan’s Qualified Default Investment Option (QDIA). Russell Investments currently serves as a 3(38) investment advisor to the Plan for the custom target date funds. Russell Investments’ contract for this assignment expires on June 30, 2016, which is the reason this search is being conducted. SFDCP’s general investment consultant, Angeles Investment Advisors, advises the Plan on manager selection within the TDFs, which include allocations to core investment options for SFDCP and other funds not represented in SFDCP’s core line up. The plan has over 25,000 participants. The current Third Party Administrator (TPA) for the Plan is Prudential.

SFDCP’s Investment Policy Statement accompanies this RFP in Appendix E.

The following table shows SFDCP participant assets in each TDF as of June 30, 2015, as well as the allocation within each fund. The 2015 fund was merged with the Retirement Fund effective September 30, 2015. A 2060 fund will be created in the future when there are sufficient age-appropriate participant assets to seed a new fund.

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4 SFDCP Custom Target Date Funds – Current Glide Path

Assets as of 6/30/15

Retirement 2015 2020 2025 2030 2035 2040 2045 2050 2055 Total

Growth Category

US Large Cap 10.6% 10.6% 12.3% 15.3% 19.3% 26.0% 26.5% 26.5% 26.5% 26.5% 16.7% US Mid Cap Core 1.2% 1.2% 1.6% 2.2% 3.1% 4.0% 4.0% 4.0% 4.0% 4.0% 2.4% US Small Cap 1.9% 1.9% 2.5% 3.6% 5.5% 8.8% 9.0% 9.0% 9.0% 9.0% 4.5% International Equity 8.7% 8.7% 10.2% 12.9% 16.5% 21.2% 21.5% 21.5% 21.5% 21.5% 13.8% Global Equity 4.4% 4.4% 5.5% 7.6% 10.5% 13.8% 14.0% 14.0% 14.0% 14.0% 8.3% Emerging Markets Equity 1.6% 1.6% 2.1% 2.9% 4.8% 7.4% 7.5% 7.5% 7.5% 7.5% 3.8% Global REITs 2.2% 2.2% 2.4% 2.6% 3.0% 3.5% 3.5% 3.5% 3.5% 3.5% 2.7% Commodities 2.2% 2.2% 2.4% 2.6% 3.0% 3.5% 3.5% 3.5% 3.5% 3.5% 2.7% Global Listed Infrastructure 2.2% 2.2% 2.4% 2.6% 3.0% 3.5% 3.5% 3.5% 3.5% 3.5% 2.7% Global High Yield Fixed Income 2.3% 2.3% 2.1% 1.9% 1.5% 0.1% 0.0% 0.0% 0.0% 0.0% 1.5% Emerging Markets Debt 1.6% 1.6% 1.5% 1.3% 1.0% 0.1% 0.0% 0.0% 0.0% 0.0% 1.1%

Total Growth 38.8% 38.8% 44.8% 55.6% 71.2% 91.7% 93.0% 93.0% 93.0% 93.0% 60.2%

Capital Preservation

US Fixed Income 45.8% 45.8% 44.6% 41.3% 28.8% 8.3% 7.0% 7.0% 7.0% 7.0% 33.5% TIPS 5.8% 5.8% 3.8% 1.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 2.3% Short Duration Bonds 9.7% 9.7% 6.9% 2.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 4.0%

Total Capital Presentation 61.2% 61.2% 55.2% 44.4% 28.8% 8.3% 7.0% 7.0% 7.0% 7.0% 39.8%

Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Total Market Value $79,509,615 $66,443,676 $100,324,647 $107,596,253 $90,490,881 $64,005,612 $38,382,903 $20,694,730 $3,949,326 $2,417,586 $573,815,230

Percentage of TDFs 13.9% 11.6% 17.5% 18.8% 15.8% 11.2% 6.7% 3.6% 0.7% 0.4% 100.0%

II. Scope of Services

The scope of work for this Request for Proposal is for an advisor to act as a fiduciary by constructing and maintaining customized glide paths on a fully discretionary basis for a series of target date funds. The scope does not include manager selection, and the selected firm would not be given any guarantees for managing any of the underlying assets, though the firm would be eligible for consideration.

Specific services to be provided by the firm selected for this assignment are:  Act as a fiduciary to the Plan within the meaning of 3(21) of ERISA.

 Serve as an investment manager to the Plan within the meaning of section 3(38) of ERISA.  Meet with SFDCP as needed, including working with SFDCP Staff, SFDCP’s Investment

Consultant, the SFERS Deferred Compensation Committee, and the SFERS Retirement Board.  Make recommendations as to the asset class and investment strategies to be included in the

TDFs.

 Recommend a “glide path” for the funds and review that glide path on a regular basis and recommend changes thereto as needed. Changes may be recommended based on factors including but not limited to: changes in the manager’s glide path methodology and/or assumptions or in trends for TDFs in the industry, changes in Plan demographics or other information deemed relevant to SFDCP’s funds.

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 Coordination with the Plan’s Third Party Administrator (TPA) and Custodian to supervise the management of the custom TDFs.

 Work with SFDCP and the TPA on managing the glide path allocation and rebalancing strategy.

 Supervise the automatic rebalancing of the funds (currently undertaken quarterly) and make recommendations regarding ad hoc rebalancing.

 Coordinate with the TPA to reconcile within three days after the receipt of rebalancing activity to confirm correct implementation of rebalancing.

 Contribute content to, review, correct and update participant documents relating to the custom TDFs, including “fund fact sheets,” summary prospectuses or Fund Profiles, as well as other participant communications relevant to the TDFs.

 Recommend benchmarks for the TDFs for use in participant communications and performance reporting.

 Confirm the calculation of performance of each custom TDF as performed by the TPA.

 Provide quarterly performance reports for Staff and the Plan on the TDFs relative to benchmarks, peers, and other criteria.

 Attend Plan Committee and other Board meetings to report on performance, benchmarking, methodology updates, and capital market assumptions as well as any recommended changes in the glide path, as well as other meetings reasonably requested.

III. Submission Requirements A. Blackout Period

For the duration of the RFP process, the Retirement System and Board will enter into a “blackout” period during which communications and meetings between parties interested in or actually responding to the RFP (“Proposers”) and Plan Staff and Board members is prohibited. This blackout period is effective upon approval of this RFP by the Board, which occurred October 14, 2015, and continues until either the review and evaluation process is completed and a contract is executed with the selected Proposer(s) or the search process is otherwise ended by the Board. This blackout period will enable the Plan and the Board to treat all Proposers fairly during the RFP selection process and permit the review and evaluation of the responses to be fair and unbiased.

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Blackout conditions are outlined below:

1. Proposers are to refrain from communications with Plan Staff and Board members. Communications include meetings, telephone conversations, letters, and email.

2. The following communications are permitted during the blackout period: written inquiries submitted as provided in Section V(B)(2) of this RFP; interviews scheduled by the Plan as part of the RFP evaluation process; and presentations scheduled before the Board by one or more Proposer as part of the RFP evaluation and selection process (if applicable).

3. Proposers may meet with Plan Staff or a Board member only if (a) the meeting is limited to discussions that are unrelated to this RFP, the Proposer’s services that are covered by this RFP, or the Proposer’s response to the RFP and (b) both the Staff/Board member and the Proposer provide advance written notice of the meeting and the subject of the meeting to the SFERS Executive Director. The Executive Director will retain the written notices regarding any such meetings, and may request written confirmation after the meeting regarding the subjects discussed.

4. Nothing in this blackout period shall limit a Proposer who is currently engaged by the Plan as a service provider from participating in meetings and communications with SFDCP Staff and Board members that are required to effectively conduct the business and services under the existing engagement.

If a Proposer has any questions regarding the blackout period, the Proposer should submit the question in writing as provided in Section V(B)(2) of this RFP.

B. Time and Place for Submission of Proposals

Proposals must be submitted and received by 5:00 p.m. (Pacific Standard Time), on

January 6, 2016. Proposals should be submitted electronically to Anna McGibbons

([email protected]) and Caryn Bortnick ([email protected]). No exceptions will be made on this deadline.

One (1) hard copy and one (1) electronic copy in Microsoft Word format, clearly marked: Target Date Fund Investment Management Services RFP 2015 of the proposal should be submitted by 5 pm (PST) on January 6, 2016 to SFDCP at:

City and County of San Francisco Employees’ Retirement System Attn: Deferred Compensation – Caryn Bortnick

Target Date Fund Investment Management Services RFP 1145 Market Street, 5th_Floor

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Proposals which are submitted by fax will not be accepted.

C. Format and Content of Proposals

Firms interested in responding to this RFP must submit the following information, in the order specified below:

Completeness, clarity, and brevity are important. Proposers should submit all information requested in this RFP in the specified format. Responses not meeting RFP requirements or that are incomplete in any way may be rejected. Proposers are urged to read this RFP carefully, to take care in the preparation of responses, and to carefully proofread the final versions for accuracy and completeness.

Proposers must submit the following information, in the order specified below:

1. Cover Letter and Executive Summary. Executive Summary should a statement of respondent firm and team members’ specific background and experience in providing target date fund investment management services to government deferred compensation plans and/or other relevant plans.

2. Response to RFP questions in Appendix A.

3. Completed Excel Spreadsheet provided with this RFP as Appendix B. In addition, Proposers must submit the required vendor forms. See RFP Section VIII(B).

IV. Evaluation and Selection Criteria

A. Minimum Qualifications - Unless otherwise indicated, all qualifications must be met as of September 30, 2015.

All proposals will be initially reviewed to determine if they are responsive to all of the City and County of San Francisco requirements. Compliance with these requirements and submission of necessary forms is mandatory at the time of submission of a proposal, prior to award of contract, or both.

1. The proposal must provide an Investment Management Firm who meets or exceeds the following standards:

a. The investment management firm must have three (3) years experience in managing target date funds for defined contribution plans or other relevant industry clients; b. At least $1B in either: total target date fund assets under management or total asset

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c. The investment management firm must have at least 1 custom target date fund client.

2. The Proposer must be an SEC-registered investment advisor or exempt from registration.

3. The Proposer must have submitted a response to SFDCP’s Request for Proposal (RFP) for Target Date Fund Investment Management Services by January 6, 2016.

4. The Proposer must be directly responsible for the management of the Target Date Funds, and all personnel responsible for the management services must be employees of the firm.

5. The Proposer must carry Errors and Omissions Insurance coverage or must have applied for it by the submission date of the RFP. E&O insurance will be required throughout the duration of the assignment.

6. The Proposer must comply with Global Investment Performance Standards.

B. Selection Criteria

Each written proposal will be evaluated by SFDCP Staff and its investment consultant. SFDCP intends to evaluate the proposals relative to each other generally in accordance with the criteria and maximum points for each sub-category itemized below.

1. Respondent Qualifications (60 points)

a. Does the response, including any statements of service and staff qualifications and previous project description clearly and specifically demonstrate expertise and experience substantially similar to what is requested for the services described in this RFP?

b. Are the proposed team members qualified? 2. Fees (30 points)

3. Performance (10 Points)

Comparing the performance among candidates of custom Target Date Fund asset allocation services is challenging, given the lack of a standardized benchmark and differences in glide path design including equity exposure and the asset classes utilized. Nevertheless, SFDCP requests that each candidate provides the following performance information:

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 Each candidate should attach a spreadsheet of monthly returns for an illustrative set of hypothetical Target Date Funds for the following retirement years: Retirement, 2020, 2030, 2040, 2050. The historical data should cover the 10 year period ending September 30, 2015 (starting October 1, 2005) using the asset allocation as it would have been for each fund specified in this paragraph and assuming index returns for each underlying asset class exposure. In addition, please provide the starting and ending hypothetical asset allocation for the funds as well as the hypothetical asset allocation at each calendar year end. Please provide a listing of the indexes used to represent each asset class exposure.

V. Schedule

A. Schedule of Events

Action Responsibility Date

RFP is advertised and issued SFDCP October 19, 2015

Deadline to submit written questions and requests for interpretation

Proposers November 13,

2015 Response to written questions to be

provided to all proposers

SFDCP November 20,

2015

Submission of proposal Proposers January 6, 2016

Review of proposals, selection of finalists

SFDCP Staff /Investment Consultant

January 2016

Semi-Finalist presentations at SFDCP offices in San Francisco

SFDCP Staff & Investment Consultant

February 9-10, 2016 Recommend finalist to SFERS Deferred

Compensation Review Committee

SFDCP Staff/Investment Consultant

March 16, 2016

Recommend finalist to SFERS Retirement Board

SFDCP Staff/Investment Consultant

April 13, 2016

Contract and fee negotiations commence

SFDCP Staff TBD

New contract takes effect TBD

B. Explanation of Events

1. Release of RFP – the RFP will be advertised and posted on the SFERS website, in the City’s Bid and Opportunity newsletter, and on the National Association of

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Government Defined Contribution Administrators, Inc., website. All firms meeting minimum qualifications, as stated in Section IV, will be welcome to participate. 2. SFDCP will keep a record of all parties who request and receive copies of the RFP.

Any requests for information concerning the RFP must be in writing, and any substantive replies will be issued as written addenda to all parties who have requested and received a copy of the RFP from SFDCP. No questions or requests for interpretation or additional information will be accepted after November 13, 2015.

3. In preparing their responses, candidates should rely only on written material concerning this RFP issued by SFDCP.

4. SFDCP will respond to all candidates’ written questions by November 20, 2015. Deadline for submission of the RFP response is

5:00 PM, Pacific Time, January 6, 2016.

No exceptions to this deadline will be granted.

5. Submissions will be considered public documents. Any material that the candidate considers “Business-Confidential” should be so marked.

C. Contract Award

To be considered, all proposals must comply with the requirements and specifications outlined in this RFP.

During contract negotiations, if SFDCP or its agent is unable to agree to contract terms with the Proposer receiving the highest evaluation in this RFP process, the Board reserves the right to terminate contract negotiations with that Proposer without undertaking another RFP process, and to negotiate with another qualified Proposer.

1. Termination – This RFP in no manner obligates the SFERS Board or any of its agencies to the eventual procurement of services described, implied or which may be proposed, until confirmed by a written contract. Progress toward this end is solely at the discretion of the SFERS Retirement Board and may terminate at any time prior to the signing of a contract.

The SFERS Board reserves the right to cancel this RFP at any time and to reject any and all proposals submitted in response to this RFP, if the SFERS Board determines such action or actions are in its best interest.

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2. Proposal Applicability – To allow sufficient time for contract negotiation, all fees and conditions stated in the proposal must be firm for a period of 120 days from the deadline for submission of proposals.

3. Legal Review – The SFERS Board expects that all candidates will agree to be bound by the terms and conditions articulated in this RFP. For this reason, it is strongly recommended that Proposers have the terms and conditions contained herein reviewed with corporate counsel and that concerns be brought to the attention of SFDCP Staff in a timely manner.

4. Governing Law – This procurement and any agreement with Proposers that may result shall be governed by the laws of the State of California and the City and County of San Francisco. Submission of a proposal constitutes acceptance of this condition.

5. Basis for Proposal – Only information supplied by the SFDCP Staff in writing or in this RFP should be used in the preparation of proposals.

6. Proposal Preparation Cost – Any cost incurred by the Proposer in the preparation, transmittal or presentation of any proposal or material submitted in response to this RFP will be borne solely by the Proposer.

7. Proposer Qualification – The SFERS Board may take such investigations as necessary to determine the ability of the Proposer to adhere to the items as identified within the questionnaire portion of this RFP. The SFERS Board reserves the right to reject the proposal of any Proposer who, in the SFERS Board’s opinion, is not a responsible candidate as defined below:

“Responsible candidate” means a candidate who submits a complete proposal and who has furnished, when required, information and data to prove that its financial resources, production and service facilities, personnel, service reputation and experience are adequate to make satisfactory delivery of the services described in the proposal.

8. Non-Discrimination in Contracts - All contracts are subject to the non-discrimination ordinance of the City and County of San Francisco. Contractors should note the provision prohibiting discrimination by contractors in the provision of benefits between employees with domestic partners and employees with spouses, and/or between the domestic partners and spouses of such employees.

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12 VI. Terms and Conditions for Receipt of Proposals

A. Errors and Omissions in RFP

Proposers are responsible for reviewing all portions of this RFP. Proposers are to promptly notify the SFDCP, in writing, if the Proposer discovers any ambiguity, discrepancy, omission, or other error in the RFP. Any such notification should be directed to SFDCP promptly after discovery, but in no event later than five working days prior to the date for receipt of proposals. Modifications and clarifications will be made by addenda as provided below.

B. Inquiries Regarding RFP

Inquiries regarding the RFP (i.e., clarification questions) must be directed by email, by November 13, 2015 to:

1. Caryn Bortnick, Interim Manager

City and County of San Francisco Deferred Compensation Plan E-mail: [email protected]

2. Anna L. McGibbons

Angeles Investment Advisors

E-mail: [email protected].

SFDCP will post answers to all questions received by the deadline at http://mysfers.org/about-sfers/request-for-proposal/ no later than November 20, 2015.

C. Addenda to RFP

SFDCP may modify the RFP, prior to the proposal due date, by issuing written addenda. Addenda will be sent via e-mail or regular, first class U.S. mail to the last known business address of each firm listed with SFDCP as having received a copy of the RFP for proposal purposes. SFDCP will make reasonable efforts to notify Proposers in a timely manner of modifications to the RFP. Notwithstanding this provision, the Proposer shall be responsible for ensuring that its proposal reflects any and all addenda issued by SFDCP prior to the proposal due date regardless of when the proposal is submitted.

D. Term of Proposal

Submission of a proposal signifies that the proposed services and prices are valid for 180 calendar days from the proposal due date and that the quoted prices are genuine and not the result of collusion or any other anti-competitive activity.

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13 E. Revision of Proposal

A Proposer may revise a proposal on the Proposer’s own initiative at any time before the deadline for submission of proposals. The Proposer must submit the revised proposal in the same manner as the original. A revised proposal must be received on or before the proposal due date.

In no case will a statement of intent to submit a revised proposal, or commencement of a revision process, extend the proposal due date for any Proposer.

At any time during the proposal evaluation process, SFDCP may require a Proposer to provide oral or written clarification of its proposal. SFDCP reserves the right to make an award without further clarifications of proposals received.

F. Errors and Omissions in Proposal

Failure by SFDCP to object to an error, omission, or deviation in the proposal will in no way modify the RFP or excuse the vendor from full compliance with the specifications of the RFP or any contract awarded pursuant to the RFP.

G. Financial Responsibility

SFDCP accepts no financial responsibility for any costs incurred by a firm in responding to this RFP. Submissions of the RFP and associated materials will become the property of SFDCP and may be used by SFDCP in any way deemed appropriate.

H. Proposer’s Obligations Under the Campaign Reform Ordinance

Proposers must comply with Section 1.126 of the S.F. Campaign and Government Conduct Code, which states:

No person who contracts with the City and County of San Francisco, for the rendition of personal services, for the furnishing of any material, supplies or equipment to the City, or for selling any land or building to the City, whenever such transaction would require approval by a City elective officer, or the board on which that City elective officer serves, shall make any contribution to such an officer, or candidates for such an office, or committee controlled by such officer or candidate at any time between commencement of negotiations and the later of either (1) the termination of negotiations for such contract, or (2) three months have elapsed from the date the contract is approved by the Retirement System or the board on which a City elective officer serves.

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If a Proposer is negotiating for a contract that must be approved by an elected local officer or the board on which that officer serves, during the negotiation period the Proposer is prohibited from making contributions to:

 the officer’s re-election campaign  a candidate for that officer’s office

 a committee controlled by the officer or candidate

The negotiation period begins with the first point of contact, either by telephone, in person, or in writing, when a contractor approaches any city officer or employee about a particular contract, or a city officer or employee initiates communication with a potential contractor about a contract. The negotiation period ends when a contract is awarded or not awarded to the contractor. Examples of initial contacts include: (i) a vendor contacts a city officer or employee to promote himself or herself as a candidate for a contract; and (ii) a city officer or employee contacts a contractor to propose that the contractor apply for a contract. Inquiries for information about a particular contract, requests for documents relating to a Request for Proposal, and requests to be placed on a mailing list do not constitute negotiations.

Violation of Section1.126 may result in the following criminal, civil or administrative penalties: (a) Criminal. Any person who knowingly or willfully violates section 1.126 is subject to a fine of up to $5,000 and a jail term of not more than six months, or both.

(b) Civil. Any person who intentionally or negligently violates section 1.126 may be held liable in a civil action brought by the civil prosecutor for an amount up to $5,000.

(c) Administrative. Any person who intentionally or negligently violates section 1.126 may be held liable in an administrative proceeding before the Ethics Commission held pursuant to the Charter for an amount up to $5,000 for each violation.

For further information, Proposers should contact the San Francisco Ethics Commission at (415) 252-3100.

I. Sunshine Ordinance

In accordance with S.F. Administrative Code Section 67.24(e), contractors’ bids, responses to RFPs and all other records of communications between the City and persons or firms seeking contracts shall be open to inspection immediately after a contract has been awarded.

Nothing in this provision requires the disclosure of a private person’s or organization’s net worth or other proprietary financial data submitted for qualification for a contract or other benefits until and unless that person or organization is awarded the contract or benefit. Information provided which is covered by this paragraph will be made available to the public upon request.

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15 J. Public Access to Meetings and Records

If a Proposer is a non-profit entity that receives a cumulative total per year of at least $250,000 in City funds or City-administered funds and is a non-profit organization as defined in Chapter 12L of the S.F. Administrative Code, the Proposer must comply with the reporting requirements of that Chapter. The Proposer must include in its proposal (1) a statement describing its efforts to comply with the Chapter 12L provisions regarding public access to Proposer’s meetings and records, and (2) a summary of all complaints concerning the Proposer’s compliance with Chapter 12L that were filed with the City in the last two years and deemed by the City to be substantiated. The summary shall also describe the disposition of each complaint. If no such complaints were filed, the Proposer shall include a statement to that effect. Failure to comply with the reporting requirements of Chapter 12L or material misrepresentation in Proposer’s Chapter 12L submissions shall be grounds for rejection of the proposal and/or termination of any subsequent Agreement reached on the basis of the proposal.

K. Reservations of Rights by SFDCP

The issuance of this RFP does not constitute an agreement by SFDCP that any contract will actually be entered into by SFDCP. SFDCP expressly reserves the right at any time to:

1) Waive or correct any defect or informality in any response, proposal, or proposal procedure;

2) Reject any or all proposals; 3) Reissue a Request for Proposal;

4) Prior to submission deadline for proposals, modify all or any portion of the election procedures, including deadlines for accepting responses, the specifications or requirements for any materials, equipment or services to be provided under this RFP, or the requirements for contents or format of the proposals;

5) Procure any materials, equipment or services specified in this RFP by an other means; or

6) Determine that no project will be pursued.

L. No Waiver

No waiver by SFDCP of any provision of this RFP shall be implied from any failure by SFDCP to recognize or take action on account of any failure by a Proposer to observe any provision of this RFP.

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16 M. Chapter 12B and 12C: Nondiscrimination in Employment and Benefits

Chapter 12B and 12C of the San Francisco Administrative Code are incorporated by reference as though fully set forth herein. Chapters 12B and 12C prohibit discrimination by City contractors in employment, the use of property, the provision of public accommodations and in the provision of benefits to employees with domestic partners and employees with spouses, and/or between the domestic partners and spouses of such employees.

Please refer to Appendix C regarding the requirements of San Francisco Administrative Code Chapters 12B and 12C.

N. Local Business Enterprise Participation

SFERS strongly encourages proposals from qualified Local Business Enterprises (“LBEs”) as defined in Chapter 14B of the San Francisco Administrative Code. If a Proposer desires to participate in the City’s Local Business Enterprise Program, which helps certain financially disadvantaged businesses increase their ability to compete effectively for City contracts, go to the “How to Qualify to Do Business with the City” tab on the Office of Contract Administration website at www.sfgsa.org for details and required forms.

O. Conflicts of Interest

The successful proposer will be required to agree to comply fully with and be bound by the applicable provisions of state and local laws related to conflicts of interest, including Section 15.103 of the City's Charter, Article III, Chapter 2 of City’s Campaign and Governmental Conduct Code, and Section 87100 et seq. and Section 1090 et seq. of the Government Code of the State of California. The successful proposer will be required to acknowledge that it is familiar with these laws; certify that it does not know of any facts that constitute a violation of said provisions; and agree to immediately notify the City if it becomes aware of any such fact during the term of the Agreement.

Individuals who will perform work for the City on behalf of the successful proposer might be deemed consultants under state and local conflict of interest laws. If so, such individuals will be required to submit a Statement of Economic Interests, California Fair Political Practices Commission Form 700, to the City within ten calendar days of the City notifying the successful proposer that the City has selected the proposer.

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17 VII. Contract Requirements

A. Standard Contract Provisions

The successful Proposer will be required to enter into a contract substantially in the form of the Investment Management Agreement, attached hereto as Appendix D. Failure to timely execute the contract, or to furnish any and all certificates, bonds or other materials required in the contract, shall be deemed an abandonment of a contract offer. The City, in its sole discretion, may select another firm and may proceed against the original selectee for damages. Full text of all referenced San Francisco municipal codes can be viewed on-line at www.sfgov.org at the Municipal Codes link under the City Resources section of the San Francisco homepage.

B. Required Vendor Forms

Before the City can award any contract to a Proposer, the Proposer must file three standard City forms with the Retirement System. See Appendix C, Required Vendor Forms.

The Proposer must submit these required forms at the time the Proposer submits its proposal. If these forms are not submitted when the Proposer submits its proposal, the proposal may be determined to be non-responsive and rejected. The forms should be submitted under separate cover in a separate, sealed envelope addressed to:

Jim Burruel, Finance Manager

San Francisco Employees’ Retirement System

Attention: SFDCP Custom Target Date Funds Investment Management RFP 1145 Market Street, 5th Floor

San Francisco, CA 94103

If a Proposer has previously completed and submitted the required forms to the Retirement System, the Proposer should not do so again unless the Proposer’s answers have changed. Please indicate this information in your RFP response.

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Appendix A, Page 1

Appendix A

RFP Questions

Proposal – Scope of Services:

1. Please complete the table below confirming whether your firm is proposing all services/duties noted in the Scope of Services of this RFP.

Yes or No

Act as a fiduciary to the Plan within the meaning of 3(21) of ERISA.

Serve as an investment manager to the Plan within the meaning of section 3(38) of ERISA.

Meet with SFDCP as needed, including working with SFDCP Staff, SFDCP’s Investment Consultant, the SFERS Deferred Compensation Committee, and the SFERS Retirement Board.

Make recommendations as to the asset class and investment strategies to be included in the TDFs.

Recommend a “glide path” for the funds and review that glide path on a regular basis and recommend changes thereto as needed.

Coordination with the Plan’s Third Party Administrator (TPA) and Custodian to supervise the implementation of the custom TDFs.

Work with SFDCP and the TPA on implementation of the glide path allocation and rebalancing strategy.

Supervise the automatic rebalancing of the funds (currently undertaken quarterly) and make recommendations regarding ad hoc rebalancing.

Coordinate with the TPA to reconcile within three days after the receipt of rebalancing activity to confirm correct implementation of rebalancing.

Contribute content to, review, correct and update participant documents relating to the custom TDFs, including “fund fact sheets,” summary prospectuses or Fund Profiles, as well as other participant communications relevant to the TDFs.

Recommend benchmarks for the TDFs for use in participant communications and performance reporting.

Confirm the calculation of performance of each custom TDF as performed by the TPA.

Provide quarterly performance reports for Staff and the Plan on the TDFs relative to benchmarks, peers, and other criteria.

Attend Plan Committee and other Board meetings to report on performance, benchmarking, methodology updates, and capital market assumptions as well as any recommended changes in the glide path, as well as other meetings reasonably requested.

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Appendix A, Page 2

2. If your firm is proposing other services that are not included in the table above, please describe and note whether the service is included in your proposed fee schedule. Warranties

3. Does your firm warrant that it maintains, or has applied for by the due date for RFP responses, an Errors and Omissions Insurance policy providing prudent coverage for negligent acts or omissions and that such coverage will remain in place for the duration of your firm’s services under the anticipated contract? Please specify the types and amounts of insurance coverage your firm maintains.

4. Does your firm warrant that all information and statements in this RFP are complete and true? Any statement or claim found to be incomplete, misleading or false will be grounds for immediate disqualification or dismissal and may be subject to legal action. 5. Does your firm warrant that it is an SEC-registered investment advisor or exempt from

registration? If so, please provide a copy of the firm’s current Form ADV. If exempt, explain the nature of exemption.

6. Does your firm warrant that it will be directly responsible for the management of the account and that all personnel responsible for the account will be employees of the firm? 7. Does your firm warrant that it has at least three (3) years experience in managing target

date funds for defined contribution plans or other relevant industry clients?

8. Does your firm warrant that it has a minimum of $1 billion in either target date fund assets under management or total asset allocation assets under advisement?

9. Does your firm warrant that it has at least 1 custom target date fund client?

10. Does your firm warrant that it is compliant with the CFA Institute’s Global Investment Performance Standards? If not, why not?

11. Does your firm warrant that it attached a spreadsheet of monthly returns for an illustrative set of hypothetical Target Date Funds for the following retirement years: Retirement, 2020, 2030, 2040, 2050. The historical data should cover the 10 year period ending September 30, 2015 (starting October 1, 2005) using the asset allocation as it would have been for each fund specified in this paragraph and assuming index returns for each underlying asset class exposure. In addition, please provide the starting and ending hypothetical asset allocation for the funds as well as the hypothetical asset allocation at each calendar year end. Please provide a listing of the indexes used to represent each asset class exposure.

12. Does your firm warrant that it has reviewed the form of Investment Management Agreement, attached as Appendix D to this RFP, and that the firm’s counsel has reviewed that agreement? Please identify any changes you would request to that Investment Management Agreement, either by providing a marked revised copy of the agreement with your requested changes or by identifying each section of the agreement

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Appendix A, Page 3

where you would request changes and specifying the changes requested. Please warrant that the marked-up copy of the Investment Management Agreement or list with agreement sections and the specific changes requested to those sections represents your full list of requested changes.

13. Have you or anyone in your firm provided any gifts, travel and room expenses, entertainment or meals to any Board member or SFDCP Staff during the past 12 months? If yes, please describe the amount of the expense and what it was for, as well as the date.

14. Does your firm currently utilize the services of a third party marketer or placement agent for the proposed product(s)? Has your firm used such services in the past? If yes, provide details on this relationship(s).

Firm Information:

15. Provide the name, title, email address and phone number of the person responsible for submitting the RFP. If there is a different person that SFDCP should contact with questions regarding this RFP submission, please also provide the name, title, email address and phone number of that person.

16. Briefly describe the ownership of the firm, including the individuals or entities that are the largest owners of the firm. Provide a list of the individuals or entities (and their percentage ownership) that have more than a 10% ownership, and indicate whether any of them are involved in the subject product.

17. Have there been any material developments (changes in ownership, personnel, business, etc.) since January 1, 2008? Briefly describe such developments, with particular emphasis on the effect of such changes on the target date fund investment management services. Indicate whether any such developments should be expected in the future and describe in as much detail as possible.

18. Please provide a chart describing the firm’s organizational structure overall and specifically relating to target date fund investment management services.

19. Has your firm or any officer or employee at your firm (or ex-officer or employee while employed at your firm) ever been involved in litigation where an allegation of a breach of fiduciary responsibility was made. If yes, for each litigation matter, please provide the following information:

a) Full name of the case;

b) Court where the case was filed; c) Case number;

d) Date the case was filed;

e) Summary of the allegations, including the names of all officers or employees referenced in the allegations or involved in the alleged conduct; and

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Appendix A, Page 4

f) Procedural posture (if the case is pending) or outcome of the case (if the case is resolved).

20. Has your firm or any officer or employee at your firm (or ex-officer or employee while employed at your firm) ever been involved in an administrative proceeding including but not limited to arbitration where an allegation of a breach of fiduciary responsibility was made. If yes, for each administrative proceeding, please provide the following information:

a) Full name of person initiating the proceeding; b) Administrative body hearing the matter; c) Proceeding number;

d) Date the proceeding was filed;

f) Procedural posture (if the proceeding is pending) or outcome of the proceeding (if the proceeding is resolved).

21. Identify any demands or claims asserted against your firm or any officer or employee at your firm (or ex-officer or employee while employed at your firm) alleging a breach of fiduciary duty that did not proceed to litigation or an administrative proceeding. For each such demand or claim, please provide the following information:

a) The name of the person asserting the demand or claim; b) The date the person asserted the demand or claim; c) The person’s relationship to the firm, officer or employee;

d) A summary of the allegations, including the names of all officers or employees referenced in the allegations or involved in the alleged conduct; and

e) How the demand or claim was resolved.

22. Identify all lawsuits filed against your firm or any officer or employee at your firm (or ex-officer or employee while employed at your firm) in the past five (5) years, and please provide the following information for each lawsuit:

a) Full name of the case;

b) Court where the case was filed; c) Case number;

d) Date the case was filed;

f) Procedural posture (if the case is pending) or outcome of the case (if the case is resolved).

23. Identify all administrative proceedings initiated against your firm or any officer or employee at your firm (or ex-officer or employee while employed at your firm) in the past five (5) years, and please provide the following information for each proceeding:

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Appendix A, Page 5

a) Full name of person initiating the proceeding; b) Administrative body hearing the matter; c) Proceeding number;

d) Date the proceeding was filed;

f) Procedural posture (if the proceeding is pending) or outcome of the proceeding (if the proceeding is resolved).

24. Has your firm been involved in an investigation or enforcement action by a regulatory agency? If yes, please explain and provide the following information:

a) The regulatory agency or agencies involved;

b) The dates of the investigation or enforcement action; c) The nature of the investigation or enforcement; and

d) Procedural posture (if the investigation or enforcement is pending) or outcome of the proceeding (if the investigation or enforcement is resolved).

25. Have any officers or employees of your firm, or ex-officers or employees while employed at your firm, been involved in litigation, investigation, or enforcement action by a regulatory agency or other legal proceedings related to investment activities. If yes, please explain.

26. Does your firm provide health and other employment benefits to domestic partners of employees? If yes, describe. If no, indicate whether your firm would adopt such benefits if it were selected for this assignment.

27. Discuss the overall business objectives of your firm with respect to future growth, including specific comments with respect to target date fund investment management services, including custom TDF management. Comment on any present or planned areas of emphasis expected in the near future (3 years or less).

28. What is your firm’s history of providing asset allocation services? Please distinguish between your firm’s history with both customized and off the shelf products for target date funds for defined contribution plans or similar products.

29. Describe your firm’s research resources and processes for asset allocation advice, with particular focus on applying those resources to designing custom target date fund glide path allocations.

30. Provide the inception date for your firm providing the following services: custom TDF glide path management? “off the shelf” target date funds?

31. What percentage of total firm revenue is from management fees earned from the management of off-the-shelf target date funds? From custom TDFs? From other asset allocation products?

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Appendix A, Page 6

32. Is your firm, its parent or affiliate a broker/dealer? If “Yes,” briefly describe the affiliation and indicate whether your firm trades in the off-the-shelf TDFs with the parent or affiliate.

Assets Under Management (AUM)

33. Please list (as of September 30, 2015) and for calendar year ends from 2010 to 2014) the number of clients and asset levels for the following categories of services related to target date funds: Glide path design only; Glide path design and manage underlying assets; Off the shelf or pre-packaged target date funds.

34. List any custom TDF accounts (including size and date of termination) that have been lost since January 1, 2008 and explain the reasons for the loss.

35. List the five largest custom TDF clients as of September 30, 2015, portfolio size, and inception date of the account. (If client name is confidential, please provide client type.) Personnel

36. Who is the current manager(s) of your firm’s target date fund practice and in what year did their tenure begin? Have there been any changes in the key decision makers since 2008? Please describe.

37. Complete the following table for the most senior professionals responsible for the target date fund investment management services (no more than 10).

Name & Location Title & Responsibili ty Total Years Experience w/ TDFs Total Years Investment Experience Years with Firm School Most Advanced Degree Ownership Interest (%) Approx. % of time devoted to custom TDFs

38. For the senior professionals listed in the table above, indicate any other products for which the individual(s) is/are responsible and how their time is allocated among the various products.

39. Provide the name, title, contact information and biography of the team members you propose for this assignment, as well as their direct experience in carrying out the services required.

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Appendix A, Page 7

40. Identify which individuals on the team proposed in this response, if any, are under employment contracts and when those contracts expire.

41. Provide an organization chart for the target date fund investment management team, including any shared resources with other products.

42. What percentages of the manager(s) retirement savings are invested in target date funds?

43. Other than the managers, how many people are specifically dedicated to this service? 44. What is their tenure with the service as well as their investment experience and

credentials?

Investment Philosophy and Process

45. Describe the philosophy and objective of your firm’s target date fund glide path design and how they differ from the TDFs of other major providers

46. What are the key inputs regarding the demographics or other characteristics of the Plan that will shape your firm’s approach to a custom target date fund assignment? Be specific about data you will need from the Plan to complete your work, and the frequency of any necessary updates.

47. How would the glidepath for a custom TDF for SFDCP differ from your current off-the-shelf TDFs?

48. What is the methodology for determining the asset mixes including key inputs such as asset returns, risk, and correlations? Attach a copy of your firm’s most recent capital market and other inputs and assumptions as an exhibit.

49. How often do you reassess your glide path strategy and asset allocation process, and the rationale?

50. How often do you recommend plan sponsors formally review and update their glide path policy allocations?

51. Does the design of your glide path result in target date funds that qualify as “qualified default investment alternatives” (QDIAs)?

52. What happens to the glide path when the fund reaches the target date (to vs. through)? Is your firm flexible to client preferences on this issue?

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Appendix A, Page 8

53. Please fill in the following table to provide your firm’s representative asset allocation for the specified target date years?

US Equity Non-US Eq. Fixed Inc Cash and Stable Value Other (Please List) Retirement 2020 2025 2030 2035 2040 2045 2050 2055

54. Does your firm utilize a “global” orientation in the equity exposure of the glidepath (e.g., where the US and non-US exposure is in-line with the MSCI ACWI) or maintain a US bias? Provide your rationale and the history with respect to the globalization of the equity portfolio, if applicable.

55. Does your firm utilize a global orientation in the fixed income exposure? Provide your rationale and history with exposure to non-US fixed income (including emerging market debt) in the glidepath.

56. Has your glide path methodology changed since the end of 2010? If so, how?

57. What factors would likely trigger a change in your glide path philosophy or practice in the future?

58. In designing the glidepath, how does your firm balance the objective of greater upside with less downside?

59. Is tactical allocation or active asset allocation a component to your firm’s target date funds? If applicable, what drives the tactical asset allocation decisions and what are the relevant allowable ranges?

60. Does your firm recommend the inclusion of tactical allocation authority in custom TDF investment management and why or why not? If you do recommend tactical allocation authority, indicate the expected net of fees impact (annualized over a 3-5 year horizon) of this expanded authority.

61. If tactical or active asset allocation is used, please provide attribution showing the value-added over the past 1, 3, and 5 year period ending September 30, 2015.

62. What is the allowable +/- range before a reallocation would occur, or how frequently does automatic rebalancing take place? Does your firm typically take responsibility for rebalancing decisions by directing the custodian to rebalance directly, or do you

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Appendix A, Page 9

submit those instructions to the plan administrator who then directs the custodian? If either, which is preferable?

Portfolio Construction

63. Which asset classes does your firm recommend for inclusion in the target date fund and how are asset classes chosen? How does the design segment asset classes by capitalization, style, geography, or other measures? If your firm would include private equity or other non-daily valued asset classes, how would you deal with the illiquidity? 64. What asset classes are you considering incorporating in the future? How often will this

decision be reviewed and by whom?

65. What level of passive management do you recommend for custom TDFs? Which asset classes or categories does your firm believe are effective for passive management in a TDF?

66. Would an asset class ever be removed from the glide path? If so, how would that be determined?

67. Describe any changes that you made to the included asset classes since January 1, 2008.

68. Do you incorporate “alternative asset classes” into your strategy? If so, please specify which asset classes and your firm’s rationale for their inclusion as well as how liquidity is managed. If not, describe your firm has opted not to incorporate “alternative asset classes” into your strategy.

69. The asset classes currently included in SFDCP’s custom TDFs are specified above in this RFP and in the SFDCP Investment Policy Statement. Specify any asset classes that are currently used that you would recommend eliminating or any you would add, and provide your rationale.

70. Do you recommend the use of Stable Value funds in custom target date funds? If so, why? If not, why not?

71. Do you recommend the use of “liquid alternatives” in custom target date funds (defined as strategies that are daily valued strategies that incorporate elements of investments often found in absolute return or hedge funds)? Provide your rationale. 72. Does your firm offer glide paths in 5 or 10 year increments? Which do you

recommend?

73. What is your opinion of using an “off-the-shelf” TDF product versus a customized product? Provide your rationale and key determinants in making such a recommendation. For a plan like SFDCP, how would you quantify the benefit of customized versus off-the-shelf?

74. Confirm whether your firm will provide glide path design without requirements for managing any of the underlying assets.

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Appendix A, Page 10

75. Will your firm recommend a specific manager structure to implement the asset class exposures of your glide path design? That is, specific weights to particular funds that SFDCP has selected in its current SFDCP line-up or other funds? If so, is that A) Required or an optional service? and B) Included in your fee proposal?

Retirement Assumptions

76. How does the glide path construction and investment process take into account participants’ level of defined benefit plan income or Social Security benefits?

77. How does the glide path construction and investment process account for participant behavior (not saving enough, not diversifying appropriately, taking loans/early withdrawals, etc.)?

78. How do you factor in the amount a participant will contribute before retirement? 79. How do you factor in the amount a participant will withdraw annually in retirement? 80. Are these assumptions based on mathematical models or actual participant data? 81. Based on these assumptions, do you believe that your glide path will help the average

participant achieve an acceptable level of retirement income? What do you define as an “acceptable level of retirement income”?

82. How do you evaluate life expectancy and how does it impact your strategy?

83. Describe the transition process for SFDCP’s custom TDF funds should your firm be selected. Start with how you would recommend changing the glide path (including the steps needed to get to a recommendation) and your recommendation for implementation in terms of any funds added or subtracted and the timing of implementation.

Participant Communication

84. How does your firm assist plan sponsors in communicating and marketing target date funds to plan participants?

85. What level of ongoing customer service support does your firm provide? Fees

86. Provide the fee schedule for your firm’s services outlined in this RFP and no tactical asset allocation. What would be your fee IN BASIS POINTS for a $600 million assignment? What would be your fee IN BASIS POINTS for an $800 million assignment?

87. Provide the fee schedule for your firm’s services outlined in this RFP and with tactical asset allocation. What would be your fee IN BASIS POINTS for a $600 million assignment? What would be your fee IN BASIS POINTS for an $800 million assignment?

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Appendix A, Page 11

88. Describe any revenue sharing agreements between your firm, mutual fund company, and third party administrator.

Cybersecurity policies:

89. Has your firm experienced any security breaches? If yes, briefly explain.

90. Does your firm carry cybersecurity insurance? If yes, provide an overview of the coverage.

91. Does your firm conduct periodic risk assessment reviews to identify potential cybersecurity threats, vulnerabilities, and potential business consequences? If so, what are the frequencies of these reviews?

92. What are your firm’s processes and systems for dealing with cybersecurity threats and protections of personal identifiable information?

93. Does your firm have an annual independent assessment made of its cybersecurity processes? If so, who provides that independent review?

94. Does your firm have a privacy and security policy, and does the policy apply to personal identifiable information of retirement plan clients? Does the policy reference storing of personal identifiable information on laptops and portable storage devices, and if so, what is that policy?

95. What is the frequency of updates to your firm’s technology systems and who ensures the updates occur on a regular basis?

96. Does your firm have policies on storing personal identifiable information including where it is stored, how long it is stored, and how it is eliminated?

97. Is advanced authentication used by the company? Can you describe the process? 98. What are the training procedures to ensure that all employees who come in contact

with personal identifiable information are aware of and follow the procedures to ensure adequate protection of the information?

99. Does your firm have a chief information security officer or similar position? Please provide that person’s biography.

Other

100. What makes your glide path construction more attractive than that of your competitors?

101. What do you see as your strategy’s key strengths and what do you see as your strategy’s key weaknesses?

102. What changes do you foresee see in the industry (including any regulatory developments) regarding target date funds over a 5-10 year horizon?

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Appendix A, Page 12

103. Describe how your firm benchmarks the performance of the TDFs it constructs and manages, including the use of simple (e.g., equity/bond) or composite (weighted index) benchmarks. What do you think is the best way to evaluate different target date funds (performance relative to benchmark, glide path, asset allocation, fees, other TDFs)? 104. What is your methodology for defaulting participants into target date funds? For

example, if a participant turns 65 in 2047, would this participant default into the 2045 or 2050 fund?

105. Provide an example of your firm’s work in constructing custom target date funds that is similar to the services sought in this RFP. Include a Project Description and Sample Reports including a concise description from inception to completion of one project completed within two (2) years from the date of this RFP with services similar to the services proposed in response to this RFP.

106. Provide references for three public pension plans and/or relevant industry clients that the respondent has provided services substantially similar to the services requested in this RFP within five (5) years from the date of this RFP. Include the name, address and phone number of the person whom we may contact. References must represent large deferred compensation or defined contribution plans. We prefer references with a minimum of $2 billion in assets and that utilize investment management services by your firm for at least $500 million in target date funds.

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Appendix B, Page 1

Appendix B

Excel Spreadsheet – Summary of Information

To be completed by Proposers and submitted (in excel) with responses

to Appendix A.

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Appendix C, Page 1

Appendix C

Required Vendor Forms

All required forms are available at the “How to Qualify to do Business with the City” webpage for the San Francisco General Services Agency, located at:

http://sfgsa.org/index.aspx?page=4762

All vendors must fill out the following forms before the SFERS can do business with them:

1. IRS Form W-9 (Request for Taxpayer Identification Number); 2. P-25 (Business Tax Certification and Tax Declaration); and

3. HRC Form 12B-101 (San Francisco Administrative Code Chapters 12B and 12C Declaration: Nondiscrimination in Contracts and Benefits).

1. IRS Form W-9 – Request for Taxpayer Identification Number:

This form provides the City with the vendor’s taxpayer identification number, which is then used to assign the vendor a City five-digit vendor number.

http://www.irs.gov/pub/irs-pdf/fw9.pdf

2. P-25 – Business Tax Certificate and Tax Declaration:

This form is used to determine is the vendor is physically “doing business in San Francisco” and therefore is required to pay business taxes:

http://www.sfgsa.org/Modules/ShowDocument.aspx?documentid=7624

3. Contract Monitoring Division form: San Francisco Administrative Code Chapters 12B and 12C Declaration:

This form is used by the City’s Contract Monitoring Division to determine if the vendor has employees and offers benefits to those employees. Depending on the vendor’s particular situation, the vendor may have to complete other forms.

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Appendix D, Page 1

Appendix

D

Investment Management Agreement

NOTE: SFDCP expects the form of the Investment Management

Agreement will be updated by the time a proposer is selected through

the RFP process.

INVESTMENT MANAGEMENT AGREEMENT

BETWEEN

[MANAGER NAME]

AND

SAN FRANCISCO CITY AND COUNTY

EMPLOYEES’ RETIREMENT SYSTEM

457(b) DEFERRED COMPENSATION PLAN

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Appendix D, Page 2

TABLE OF CONTENTS

ARTICLE I APPOINTMENT, AUTHORITY AND RESPONSIBILITY OF

INVESTMENT MANAGER ... 6 1.01 APPOINTMENT ... 6 1.02 STATEMENT OF OBJECTIVES, GUIDELINES AND

PROCEDURES; CODE OF ETHICS AND TRADING POLICY ... 7 1.03 MANAGEMENT OF ASSETS ... 7 1.04 FIDUCIARY DUTY; STANDARD OF CARE ... 8

1.05 AUTHORIZED PERSONNEL ... 8 1.06 AUTHORIZED INSTRUCTIONS ... 9

1.07 CUSTODY OF ASSETS ... 9 1.08 WITHDRAWAL OF ASSETS FROM MANAGEMENT ... 9

1.09 TRADING PROCEDURES ...10 1.10 INVESTMENT MANAGER NOT ACTING AS PRINCIPAL ...10

1.11 BROKERAGE ...10

1.12 TRADE SETTLEMENT ...11 1.13 DISCRETIONARY RIGHTS AND POWERS AFFECTING THE

MANAGED ASSETS ...11 1.14 ACTING ON ILLEGAL INFORMATION ...11 1.15 SOFT DOLLAR TARGETS ...11 1.16 RECAPTURE COMMISSION TARGET ...13

1.17 ACCOUNT RECONCILIATION ...13 1.18 NOTIFICATION OF TAX LIABILITIES ...13

1.19 ADMINISTRATION OF RECORDS ...13 1.20 REPORTING ...14 1.21 PROXY VOTING ...14 1.22 MEETINGS ...15 1.23 KEY PERSONNEL ...15

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Appendix D, Page 3 ARTICLE II COMPENSATION ...15 2.01 FEE STRUCTURE ...15 2.02 INVOICES...16 2.03 MOST FAVORED NATION ...16 2.04 FALSE CLAIMS ...16 ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS OF

INVESTMENT MANAGER ...17 3.01 INVESTMENT MANAGER’S REPRESENTATIONS, WARRANTIES

AND COVENANTS ...17 ARTICLE IV INSURANCE AND INDEMNIFICATION ...21 4.01 INSURANCE ...21

4.02 INDEMNIFICATION ...22 4.03 FORCE MAJEURE ...23

4.04 LIMITATION ON LIABILITY OF THE RETIREMENT SYSTEM ...23 ARTICLE V TERM AND TERMINATION ...24 5.01 TERM OF THE AGREEMENT ...24 5.02 TERMINATION FOR CONVENIENCE ...24 5.03 TERMINATION FOR DEFAULT ...24 5.04 RIGHTS, REMEDIES AND RESPONSIBILITIES UPON

TERMINATION ...25 5.05 MEASURE OF DAMAGES ...26 ARTICLE VI SAN FRANCISCO PROVISIONS ...26 6.01 MACBRIDE PRINCIPLES – NORTHERN IRELAND ...27

6.02 RESOURCE CONSERVATION ...27 6.03 SUNSHINE ORDINANCE ...27 6.04 LIMITATIONS ON CONTRIBUTIONS ...27

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Appendix D, Page 4 ARTICLE VII NON-DISCRIMINATION ...28

7.01 NON-DISCRIMINATION; PENALTIES ...28 7.02 NON-DISCRIMINATION IN BENEFITS ...28

7.03 CONDITION TO CONTRACT ...29 7.04 INCORPORATION OF ADMINISTRATIVE CODE PROVISIONS

BY REFERENCE ...29 7.05 COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT ...29 ARTICLE VIII MISCELLANEOUS ...29 8.01 CONFIDENTIALITY ...29 8.02 NOTICES ...30 8.03 NO ASSIGNMENT, SUBCONTRACTING OR DELEGATION ...30 8.04 NO WAIVER ...31 8.05 AMENDMENTS IN WRITING ...31

8.06 ADMINISTRATIVE REMEDY ...31 8.07 SECTION HEADINGS ...31 8.08 ENTIRE AGREEMENT ...31

8.09 GOVERNING LAW; JURISDICTION ...32 8.10 COMPLIANCE WITH LEGAL REQUIREMENTS ...32 8.11 SEVERABILITY ...32 8.12 SERVICES PROVIDED BY ATTORNEYS ...32

8.13 DRUG-FREE WORKPLACE ...32 8.14 COOPERATION IN CONTRACT ADMINISTRATION ...33

8.15 FURTHER ACTS AND ASSURANCES ...33 8.16 PUBLICITY ...33 8.17 REPLACEMENT OF INVESTMENT MANAGER’S AGENTS ...33

8.18 COUNTERPARTS ...33 8.19 JOINT AND SEVERAL LIABILITY ...33

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Appendix D, Page 5 8.21 WORD USAGE ...34

EXHIBIT A - Investment Policy Statement

EXHIBIT B - Statement of Objectives, Guidelines and Procedures EXHIBIT C - Key Personnel