Pension Fund Request for Proposals - Public School Teachers ...

Chicago Teachers’ Pension Fund 

Request for Proposals 

Emerging Markets Equity Manager Search 

PART 1 -- INTRODUCTION AND GOAL OF THE REQUEST FOR 

PROPOSALS 

1.1 INTRODUCTION - GENERAL INFORMATION 

The Chicago Teachers’ Pension Fund (CTPF) is requesting proposals from emerging markets 

equity investment management firms. Only active strategies will be considered. Please refer to 

Part 4 of this Request for Proposals (RFP) for qualifications for the assignment. 

CTPF has approximately $220 million to allocate to emerging markets equity portfolios. 

actual amount of the allocations will be determined by the CTPF Board of Trustees. 

The 

There is no expressed or implied obligation for CTPF to reimburse responding firms for any 

expenses incurred in preparing proposals in response to this request. 

CTPF reserves the right to reject any or all proposals submitted. All proposals submitted will be 

evaluated by members of the CTPF Investment Department staff (“Staff”) and CTPF’s investment 

consultant (“Consultant”), Callan Associates. Firms may be asked to make formal presentations of 

their proposals to the CTPF Investment Committee and/or the CTPF Board of Trustees (“Board”). 

Selection of the investment manager(s) is subject to final approval by the CTPF Board. 

1.2 GOAL 

CTPF is soliciting proposals from qualified emerging markets equity managers. The intent of the 

contractual relationship will be to establish an ongoing relationship between CTPF and the selected 

firm(s) for the purpose of providing CTPF with international emerging market investment 

management services for a mandate size to be determined. 

1.3 QUIET PERIOD 

The Quiet Period is the period of time beginning when the investment manager search RFP is 

announced and ends when the investment management firm(s) is(are) selected by the Board or the 

process is declared to be complete. 

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Respondents shall not contact CTPF Board members during the Quiet Period and should direct all 

questions and communications to the Director of Investments, Executive Director, Callan 

Associates or other contacts identified in this RFP. 

Incumbent investment management firm respondents may communicate with the CTPF Board 

members during the Quiet Period, but may not discuss this investment management search with 

CTPF Board members during the Quiet Period. The purpose of the Quiet Period is to ensure that 

all prospective investment managers have equal access to information regarding the search 

objective and requirements; to be certain that communications are consistent and accurate; and to 

make the search process and selection process efficient, diligent, and fair. 

The Quiet Period will be posted to the CTPF website to prevent inadvertent violations by 

investment managers responding to this RFP. 

CTPF Board members and members of the Staff not directly involved in this search shall refrain 

from communicating with the respondents regarding any product or service related to this search 

during the Quiet Period unless this communication takes place during a formal site visit or 

interview conducted as part of this investment management search. 

An RFP respondent will be disqualified for violating the Quiet Period. 

Offering or providing anything of value to the CTPF Board members and members of the Staff is 

prohibited. 

PART 2 -- BACKGROUND INFORMATION ON CTPF 

2.1 PLAN DESCRIPTION 

CTPF is a public pension plan established and governed by the Illinois Pension Code (40 ILCS 5/1- 

101 et seq). 

2.2 CTPF STATEMENT OF INVESTMENT POLICY 

The members of the Board, employees of the Board, and agents thereof stand in a fiduciary 

relationship to the members of the system regarding the investment and disbursement of any of the 

monies in the Fund. 

In exercising this fiduciary responsibility, the Board is governed by the prudent man rule. 

Within this framework the Board seeks to optimize the total return on the Fund’s portfolio through 

a policy of diversified investment to achieve maximum rates of return within a parameter of 

prudent risk as measured on the total portfolio. 

CTPF’s current Statement of Investment Policy can be found at www.CTPF.org, then clicking on 

Investments. 

The Statement of Investment Policy may be amended from time to time by a majority vote of the 

Board. 

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2.3 PORTFOLIO DESCRIPTION 

CTPF’s portfolio is a diversified and global portfolio having a total market value of approximately 

$9.2 billion as of December 31, 2011. The majority of the portfolio is managed by outside 

investment managers. CTPF’s strategic asset allocation targets are as follows: 

Asset Class 

Strategic Target 

Domestic Equity 31.25% 

International Equity 31.25% 

Fixed Income 19.5% 

Real Estate and REITS 9.0% 

Alternative Investments 7.0% 

Cash 2.0% 

TOTAL 100.0% 

2.4 PORTFOLIO LONG TERM OBJECTIVES FOR THIS ASSIGNMENT: 

The investment manager shall invest the account in a diversified emerging markets equity 

portfolio. The objective for this account is to outperform the MSCI Emerging Markets Index, net 

of fees, over a market cycle. 

PART 3 -- SERVICES TO BE PERFORMED 

CTPF continually seeks to employ investment managers who possess superior capabilities in the 

management of the assets for public retirement funds. CTPF further requires those investment 

managers selected and working on its behalf to meet the following set of conditions: 

A. To recommend actions which in their best professional judgment are in the best interests 

of CTPF to meet the investment objectives of this RFP. Such recommendations include 

but are not limited to a) specific investment opportunities regarding the acquisition, 

retention or disposition of investments; and (b) the addition, deletion or modification of 

authorized investments. 

B. To select, in its sole discretion, the firms that are to act as a securities broker/dealers 

with respect to the purchase and sale of assets of the Master Trust allocated to the Fund. 

The investment manager or any entity controlled by or controlling it, or affiliated with 

it, shall not act as a securities broker/dealer with respect to purchases and sales of assets 

allocated to the Fund unless the CTPF specifically approves such action. 

C. Subject at all times to compliance with its fiduciary obligations, the investment manager 

shall select such firm or firms in accordance with CTPF’s policy on goals for the 

utilization of minority owned and female owned broker/dealers and broker/dealers 

owned by a person with a disability as set forth in the then current Investment Policy. 

Our current minority broker utilization goal reads as follows: 

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The Chicago Teachers’ Pension Fund is committed to providing opportunities for 

minority owned and female owned broker/dealers and broker/dealers owned by a 

person with a disability. The Chicago Teachers’ Pension Fund Board of Trustees 

has adopted a policy which sets forth goals for increasing the utilization of these 

broker/dealers. 

The minimum expectations for the utilization of these broker/dealers by investment 

managers of separately managed investment portfolios, based on asset class, shall be 

as follows: 

Asset Class 

Minimum Goal 

U.S. Equities 50% 

International Equities 25% 

Fixed Income 25% 

International Small-Cap Equities 20% 

These goals are subject to annual review by the CTPF Board of Trustees. 

Investment managers may not use indirect methods such as step-outs to achieve 

these goals. 

Emerging markets investment managers of separately managed accounts and pooled 

investment portfolios are directed to use their best efforts to execute trades with 

minority owned and female owned broker/dealers and broker/dealers owned by a 

person with a disability. 

All investment managers executing brokerage on behalf of the Chicago Teachers’ 

Pension Fund are directed to meet these minimum goals on an annual basis in their 

specific portfolios and shall report quarterly on their utilization of minority owned 

and female owned broker/dealers and broker/dealers owned by a person with a 

disability. Any investment manager failing to meet the minimum goal during the 

reporting quarter must provide a written explanation disclosing the reasons for not 

meeting the goal. 

D. In the selection of broker/dealers with whom to place orders for the purchase or sale of 

securities for the Fund, the primary objective of the investment manager shall be to 

obtain the most favorable results for the Fund. The investment manager’s selection of 

broker-dealers may take into account such relevant factors as (1) price and/or 

commission; (2) the broker/dealer’s facilities, reliability, and financial responsibility; (3) 

the ability of the broker/dealer to effect securities transactions, particularly with respect 

to such aspects as timing, order size, execution of orders, and the ability to complete a 

transaction through clearance, settlement, and delivery; and (4) the research and other 

services provided by such broker/dealer to the investment manager which are expected 

to enhance general portfolio management capabilities, notwithstanding the fact that the 

Fund may not be the direct or exclusive beneficiary of such services. The investment 

manager’s selection of such broker/dealers shall be in accordance with Article I of the 

Illinois Pension Code (40 ILCS 5/1-101 et seq.), the Investment Advisors Act of 1940, 

and any other applicable securities laws, rules, and regulations. 

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E. To report to the Board monthly, in writing, on the composition and relative performance 

of the investments in the designated portfolio; the economic and investment outlook for 

the near and long term; significant changes in the portfolio during the month; and the 

reasons for any significant differences between the performance of the portfolio and the 

appropriate market indices or other performance benchmarks established by CTPF and 

the investment manager. 

F. Additional responsibilities as detailed in each investment manager’s agreement with the 

Board. 

PART 4 -- QUALIFICATIONS FOR THE ASSIGNMENT 

The respondent must be registered as an investment adviser or a bank as defined under the 

Investment Advisers Act of 1940. 

The respondent must be bonded in accordance with the provisions of the Employee Retirement 

Income Security Act of 1974. 

The respondent must agree to act as a fiduciary with respect to CTPF. 

The respondent must be familiar with and be prepared to comply with Articles 1 and 17 of the 

Illinois Pension Code. 

The respondent must complete the certifications in Exhibits A, B, and C. 

The respondent must have demonstrated experience in providing discretionary investment 

management services to large public pension plan clients. 

Eligible firms will have an established firm in place with all key personnel required to operate the 

firm employed. 

Only active strategies will be considered. 

PART 5 -- SPECIFICATIONS FOR THE ASSIGNMENT 

At the point of contract, a final detailed agreement concerning services, investment guidelines, and 

performance expectations will be agreed upon between CTPF and the successful firm(s). A sample 

of CTPF’s standard Investment Management Agreement is attached as Exhibit D. The terms of the 

final contract between CTPF and the successful firm(s) will be binding and supersede this RFP. In 

addition, CTPF will require the successful firm(s) to acknowledge, in writing, that it is (they are) a 

fiduciary with respect to CTPF. The following completed certifications will also be required: 

A. Exhibit A: CTPF Disclosure Schedule of Certification 

B. Exhibit B: High Risk Home Loan Act Certification 

C. Exhibit C: Illinois Governmental Ethics Act Certification 

D. Exhibit D: CTPF’s Standard Investment Management Agreement 

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E. Exhibit E: Sudan Investment Restriction 

The investment manager will provide CTPF with international emerging market investment 

management services which will be based upon the following general guidelines: 

A. The portfolio will be fully invested international emerging market equity securities. The 

amount of cash and cash equivalents at any time should be no more than 5% of the portfolio 

except during periods of cash contributions or withdrawals. 

B. The portfolio will be diversified by broad sector classification (i.e. Financials, Energy, etc.). 

C. No individual security will comprise more than 5% of the total portfolio at market value. 

D. The portfolio will be invested in equity securities that are listed on local exchanges. 

E. Please see Exhibit E –Sudan Investment Restrictions. All respondents must be able to 

comply with these restrictions. 

Specific investment manager guidelines for this assignment will be negotiated with the successful 

respondent(s) during contract negotiations. 

PART 6 -- REQUIREMENTS AND INSTRUCTIONS FOR RFP 

COMPLETION 

6.1 RFP OBJECTIVE 

A. To provide sufficient information for the preparation of competitive proposals by qualified 

respondents. 

B. To provide for a fair and objective evaluation of proposals. 

C. To result in a continuing contract between the successful respondent(s) and CTPF. 

6.2 RFP DUE DATE & DELIVERY 

This RFP is available in the Business Opportunities section of the Investments tab on the CTPF 

website at www.ctpf.org 

In addition, four hard copies of the proposal must be received by CTPF and one email copy must be 

received by Callan Associates no later than 12:00 Noon (CST), April 2, 2012. Hard copies should 

be submitted using double-sided printing. 

Four submissions must be addressed and delivered to: 


203 North LaSalle Street, Suite 2600 

Chicago, Illinois, 60601-1231 

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Attn: Carmen Heredia-Lopez, Director of Investments 

An electronic copy should be submitted to the following address: 

rfp.invest@ctpf.org 

An electronic submission should be submitted to the following address: 

laim@callan.com 

As part of this RFP, all respondents must also complete or update Callan Associates’ 

Manager Questionnaire which can be found at www.callan.com. If your firm is not already 

in the Callan database, please send an e-mail to database@callan.com to request a user name 

and password. Callan’s Manager Questionnaire must be completed no later than 12:00 Noon 

(CST), April 2, 2012. 

All proposals must be complete in every respect and must answer concisely and clearly all 

questions asked in this RFP. Incomplete proposals will be disqualified. 

Late proposals will not be accepted. 

6.3 TIMELINE 

While there is no fixed date for the selection of an international emerging market investment 

management firm(s), it is anticipated that the finalist presentations to occur on June 21, 2012. 

Following selection, it is expected that contract negotiations will be completed by July 31, 2012. 

6.4 INQUIRIES 

During the evaluation process, CTPF retains the right to request additional information or 

clarification from respondents to this RFP. CTPF, at its discretion, may also allow corrections of 

errors or omissions by respondents. 

Inquiries should be submitted via e-mail to: 

Carmen Heredia-Lopez at: 

Copy: Gissel Gomez at 

Copy: Kevin Huber at: 

Copy: Matt Lai at: 

heredialopezc@ctpf.org 

gomezg@ctpf.org 

Huberk@ctpf.org 

laim@callan.com 

Inquiries must be received no later than 12:00 Noon (CST), March 20, 2012 at rfp.invest@ctpf.org. 

In all cases, no verbal communications will override written communications. 

6.5 DISCLOSURE OF PROPOSAL CONTENT 

The laws of Illinois require that at the conclusion of the selection process, the contents of all 

proposals be placed in the public domain and be open to inspection by interested parties. Trade 

secrets or proprietary information must be clearly identified as such in the proposal and will not be 

released to the extent permitted by law. 

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6.6 DISPOSITION OF PROPOSALS 

All proposals become the property of CTPF and will not be returned to the respondent. CTPF 

reserves the right to retain all proposals submitted and to use any ideas in a proposal regardless of 

whether that proposal is selected. Submission of a proposal indicates acceptance of the conditions 

contained in this RFP, unless clearly and specifically noted in the proposal submitted and 

confirmed in the contract between CTPF and the firm selected. 

6.7 SIGNATURE OF RESPONDENT AGENT 

The tendered proposal, and any clarifications to that proposal, shall be signed by an officer of the 

responding firm or a designated agent empowered to bind the firm in a contract. All proposals 

submitted electronically must be submitted by an officer of the responding firm. 

PART 7 -- GENERAL TERMS AND CONDITIONS OF THE CONTRACT 

INCLUDING PERFORMANCE REVIEW CRITERIA 

7.1 TERM OF ENGAGEMENT 

The term of engagement shall commence on the effective date of the contract and shall continue 

until the date on which it is terminated by CTPF, or the investment manager, upon 30 days’ 

advance written notice to the other; provided, however, that at any time, without prior written 

notice, the CTPF may orally direct the investment manager to cease its management activities with 

respect to the Fund, which direction shall be confirmed, in writing, as soon as practicable. 

7.2 CRITERIA FOR THE POST PERFORMANCE REVIEW 

Performance shall be evaluated based upon successful execution of the services to be performed 

under the contract. 

PART 8 -- SELECTION PROCESS 

CTPF reserves the right to award this contract to the firm(s) which, in its sole opinion, will provide 

the best match to the requirements of the RFP. 

CTPF reserves the right to reject respondents due to their noncompliance with the requirements of 

this RFP. Additionally, CTPF reserves the right not to hire or defer the hiring of any firm for 

investment management services. 

8.1 SELECTION PROCESS 

Staff and Consultant shall objectively review the proposals to identify qualified candidates based on 

the criteria presented in the RFP as supplemented by material provided by the Consultant. Staff 

and Consultant and members of the Board may interview all, some or none of the RFP respondents, 

undertake site visits to respondent offices, and conduct such other due diligence as is prudent under 

the circumstances. 

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Staff and Consultant will prepare a report and present the report to the Board of Trustees during a 

public meeting of the Board of Trustees. 

The Board of Trustees may interview finalists and will determine if a recommendation for the 

award of a contract will be made to the Board. The Board shall then act on the recommendation of 

the Board of Trustees. 

During the selection process all respondents to the RFP will be evaluated and ranked on four 

primary factors: 

People - stability of the organization, ownership structure, and documented experience of 

key professionals 

Process - clearly defined, reasonable, and repeatable investment strategy 

Performance - documented ability to meet investment performance benchmarks 

Pricing - fee schedule and associated costs 

Staff is required to identify all minority and female-owned firms and firms owned by persons with 

a disability in the report presented to the Board of Trustees. Staff must specify the reasons when 

these firms are not brought forward as finalists. 

CTPF reserves the right to reject any respondents due to noncompliance with the requirements and 

instructions in the RFP. 

PART 9 -- PROJECTED TIMELINE FOR COMPLETION OF THE 

INTERNATIONAL EMERGING MARKET MANAGER SEARCH 

9.1 TIMELINE 

A. Requests for Proposal will be publicized by CTPF on www.CTPF.org (under the general 

information tab, current RFP link) and on the Callan website under the News section by 

March 13, 2012. 

B. Inquiries for interpretation must be received by March 20, 2012. 

C. Responses to inquiries will be posted to the CTPF.org, under the general information tab, 

current RFP link, website by March 26, 2012. 

D. Proposals must be received by 12:00 Noon (CST), April 2, 2012. 

F. At our discretion, members of the CTPF Board of Trustees and Staff may interview the 

candidate firms. 

There is no fixed date for the award of the contract by the CTPF Board of Trustees. It is anticipated 

that prior to the selection of a new investment manager(s), candidates will be requested to present 

their firms to the Board of Trustees during the meeting tentatively scheduled for June 21, 2012 

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Following selection, it is expected that the contract negotiations will be completed during the 

month of July 2012. 

Timeline is subject to change. 

PART 10 -- RFP QUESTIONNAIRE: EMERGING MARKETS EQUITY 

MANAGER SEARCH 

10.1 PROPOSAL PREPARATION INSTRUCTIONS 

Your firm must provide a thorough answer to each question raised in Paragraphs 10.2 through 10.5. 

Failure to adequately respond may be cause for rejection of a firm’s proposal. 

10.2 MANDATORY REQUIREMENTS 

A. The questions presented in Sections 10.2 through 10.5 must be answered completely and in 

the same sequence. Supporting material must be clearly referenced to the appropriate 

question. Material which is strictly promotional in nature should not be used. The 

submission of extraneous material will serve to disqualify the firm from further 

consideration. 

B. Four hard copies of the proposal must be received by CTPF later than 12:00 Noon (CST), 

April 2, 2012. Responses to this rfp must also be received via email at rfp.invest@ctpf.org 

and to laim@callan.com by 12:00 Noon (CST), April 2, 2012. 

C. All respondents must also complete or update Callan Associates’ Manager 

Questionnaire which can be found at www.callan.com. If your firm is not already in 

the Callan database, please send an e-mail to database@callan.com to request a user 

name and password. Callan’s Manager Questionnaire must be completed no later 

than 12:00 Noon (CST), April 2, 2012. 

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REQUEST FOR PROPOSAL QUESTIONNAIRE 

INTERNATIONAL EMERGING MARKET S MANAGER SEARCH 

FIRM NAME: 

ADDRESS: 

______________________________________ 

______________________________________ 

______________________________________ 

TELEPHONE #: 

FAX #: 

CLIENT CONTACT: 

TITLE: 

DATE: 

E-MAIL ADDRESS: 

FIRM WEBSITE: 

______________________________________ 

______________________________________ 

______________________________________ 

______________________________________ 

______________________________________ 

______________________________________ 

______________________________________ 

10.3 FIRM INFORMATION 

A. ORGANIZATIONAL SUMMARY 

1. a. Please indicate your firm’s fiduciary classification. Please check all that apply: 

_____ Registered Investment Advisor 

(registered under the federal Investment Advisors Act of 1940) 

_____ Bank 

(as defined in the federal Investment Advisors Act of 1940) 

_____ Other: ___________________________ 

b. Please acknowledge that your firm, if chosen, will act as a fiduciary with respect to 

CTPF. 

Yes 

No 

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2. Please describe the history of the firm, and if appropriate, the history of the parent 

organization including: 

a. year the firm was founded and/or year the parent was founded. 

b. ownership percentages and names. 

c. the year the firm began providing investment management services to U.S. 

tax-exempt clients, and the nature of the firm’s ownership and specific details with 

regard to any affiliated companies or joint ventures. 

d. whether investment management capabilities were developed in-house or derived 

through acquisition of talent from another firm. If the latter, indicate when this 

occurred. 

e. any material changes in your organization (including personnel changes) in the past 

five years. Please include prior names and the length of time your organization has 

been in business under its present name and ownership. 

3. Please provide an organization chart which diagrams the ownership structure and 

interrelationships between the parent-subsidiary, affiliate, or joint venture entities. (Attach 

as Appendix A) 

4. Please provide your firm’s current succession plans. Are there any current plans for 

founders or other senior members of the firm to retire? 

5. Please provide the location and function of each of your firm’s offices: 

Location Function Number of Professionals 

________ _____________ ___________ 

6. Which of your firm’s offices would service this account? Which specific services would be 

provided by which offices? 

7. Please list your firm’s lines of business and the approximate contributions of each business 

to your organization’s total revenue. If you are an affiliate or subsidiary of an organization, 

what percentage of the parent firm’s total revenue does your subsidiary or affiliate generate? 

8. Please provide details on the financial condition of your firm. Most recent annual reports 

filed with the SEC will be acceptable, but any recent material changes should be included. 

(Attach as Appendix B). 

9. Are you currently out of compliance with the SEC, DOL, or any other regulatory agency? 

If yes, please explain. Please provide a copy of your most recent ADV Part I and Part II. 

(Attach as Appendix C). 

10. Please provide a copy of your firm’s most recent policies and procedures addressing 

business continuation and disaster recovery. (Attach as Appendix D). 

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11. Please discuss the overall business objectives of your firm with respect to future growth. 

Comment on any present or planned areas of emphasis over the near future. Be sure to 

include in your response: 

- total assets or client relationships that will be accepted 

- maximum amount of number of clients or assets per portfolio manager 

- plans to develop and expand resources 

- plans to merge with other firms 

- plans to acquire other firms 

- plans to spin off subsidiaries 

- plans to be spun off by a parent firm 

12. Please provide the name of the regulatory body overseeing the firm, this product, and the 

dates of registration. 

13. Over the past five years, has your organization or any of its affiliates or parent, or any officer 

or principal been involved in any business litigation or other legal proceedings related to 

your management or investment activities? If so, provide a brief explanation and indicate 

the current status. 

14. Does your firm or parent company run or have an interest in a securities brokerage firm? 

Does your firm trade for client accounts through this broker/dealer? If so, to what extent? 

15. Does your firm provide investment management services to U.S. tax-exempt investors? If 

so, to what extent? 

16. Does your firm permit its staff members to serve on boards of directors? If so, are any 

restrictions placed on this activity and how is their director compensation treated? 

17. Please provide your firm’s Conflict of Interest Policy and a description of policy 

enforcement procedures. (Attach as Appendix E) 

18. Please provide your firm’s Code of Ethics Policy and a description of the policy 

enforcement procedures (Attached as Appendix F) 

19. Does your firm qualify as a minority owned business, a female owned business or as a 

business owned by a person with a disability as these terms are defined in the Illinois 

Business Enterprise for Minorities, Females, and Persons with Disabilities Act? 

B. FIRM PERSONNEL 

1. Please fill out the following table as of December 31, 2011, listing the number of 

individuals in each job function. If individuals hold multiple job functions or 

responsibilities, only count them once under their main responsibility and please detail this 

in the “Notes” section at the bottom of the table. 

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Job Function 

Compliance Personnel 

Portfolio Managers 

Research Analysts 

Traders 

Economists 

Client Service 

Marketing 

Operations 

Information Technology 

Other Staff 

Total Firm Employees 

Number of 

Employees 

Notes:________________________________________________ 

______________________________________________________ 

______________________________________________________ 

2. Please list all principal officers, portfolio managers, analysts, and client service personnel in 

the table format below. Highlight the person(s) who would be responsible for the CTPF 

account. 

Name 

Office 

Location 

Title 

Responsibilities 

Yr. 

Started in 

Industry 

Yr. 

Started 

with Firm 

Education* 

Degree/ 

College 

Percentage 

of Firm 

Ownership 

* Most advanced degree only. 

3. Have any senior personnel left the firm in the last five years? For departures, provide a 

table that shows the following: name, job title, functional area and investment product they 

were involved in, year started with the firm, departure date, reason for departure, and who 

replaced them. 

4. Please discuss the compensation package available to your firm’s professional staff, 

including any incentive bonuses and how they are awarded. Please be detailed and specific 

without necessarily disclosing dollar amounts. 

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5. What other programs do you have in place to retain key staff? Please be detailed and 

specific. 

6. Please fill out the following Diversity Profile table for your entire firm. Please provide for 

both calendar years 2010 and 2011. 

15

Chicago Teacher's Pension Fund 

DIVERSITY PROFILE -- External Managers 

Name of Asset Management Firm 

as of December 31, 2011 

Hispanic or Latino 

Non-Hispanic or Latino 

MALE 

FEMALE 

Hawaiian or 

American 

Hawaiian or 

American 

Black or 

Other 

Indian or 

Black or 

Other 

Indian or 

Job Categories 

Male Female White 

African 

American 

Pacific 

Islander 

Asian 

Alaska 

Native 

Two or More 

Races 

White 

African 

American 

Pacific 

Islander 

Asian 

Alaska 

Native 

Two or More 

Races 

Overall 

Totals 

Exec / Sr Officials & 

Managers 

0 

Investment Professionals 

(Excluding Traders) 

0 

Investment Professionals 

(Traders) 

0 

Professionals - Operations, 

Compliance, etc. 

0 

Professional - Sales / 

Marketing & Client Services 

0 

Administrative Support, 

Office/Clerical 

0 

Other Non-Professionals 0 

Total 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 

Percent of Total #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! 

Notes: Table format and categories for race/ethnicity derived from the US Department of Labor Equal Employment Opportunity Employer Information 

Report (EEO-1). 

Complete Diversity Profile for your total firm or US workforce only or by Business Unit. Please also complete the Diversity Profile for the team responsible for the CTPF portfolio. 

Report Full-Time employees only and report employees in only one category. 

Please do not change table format. 

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C. CLIENT SERVICE 

1. Please indicate the scope of services that will be provided for this account. Please include 

a description of how client servicing/communication responsibilities are divided between 

portfolio managers and client service/marketing personnel and how often portfolio 

managers meet with clients to review the portfolio. 

2. How often would the primary contact for the CTPF account be available for client 

meetings? 

3. Please describe your firm’s back-up procedures in the event the primary contact assigned 

to this account should leave the firm or is not available to attend a scheduled meeting. 

4. Please describe the client reporting process. How frequently are reports made available? 

5. Are client reports and performance data available via your website? 

D. COMPLIANCE 

1. Does your firm, or parent firm, have Errors and Omissions Insurance? If yes, for what 

amount? Please attach evidence of your coverage as Appendix G. 

2. Does your firm, or parent firm, have Fiduciary Liability Insurance? If yes, for what 

amount? Please attach evidence of your coverage as Appendix H. 

3. Is your firm, or parent firm, bonded? If yes, for what amount? Please attach evidence of 

your coverage as Appendix I. 

4. Please describe the compliance assessment process, including the time period covered, 

testing methods, and frequency. 

5. When was the last compliance assessment? Please attach a summary of the report, if 

possible. 

6. To whom does the chief compliance officer report? 

7. When was your firm’s last regulatory inspection (e.g. by the SEC in the United States or 

the Financial Services Authority in the United Kingdom)? Please provide a summary of 

the inspection results. 

8. Has any regulatory body or market authority issued any orders or other sanctions against 

your firm in the last five years? If yes, please describe. 

9. Is your firm or any affiliate the focus of any pending or ongoing litigation, formal 

investigation or administrative proceedings related to money management activities? If 

yes, please describe.

10. Have the principals of your firm been under investigation related to money management 

activities in the last five years? If yes, please explain. 

11. Please disclose all direct and indirect fees, commissions, penalties and other 

compensation paid by or on behalf of the investment manager or bank in connection with 

the provision for services rendered to the CTPF. If selected, your firm will be required to 

sign a disclosure form which shall include the date and amount of each payment and the 

name and address of each recipient of a payment. The investment manager or bank must 

also promptly update this disclosure after any modification of these payments or after 

making additional payments or new payments not previously reported. 

12. Have auditors ever issued qualified financial statements for your firm? 

13. Are outside representatives or consultants used for any of the firm’s activities? 

E. GOVERNANCE 

1. Please provide a summary of your firm’s internal control structure. 

2. Please describe any potential conflicts of interest your firm may have in the management 

of this account. If there are conflicts, please describe how they are addressed. 

F. TRADING 

1. Please describe any restrictions you may have on client-directed transactions. 

2. Please describe your policies and procedures concerning trading and execution, including 

those relating to (i) how your firm seeks to achieve best execution; (ii) how your firm 

ensures equitable trading for all clients (i.e. the account of one client is not favored above 

the account of another) and exceptions to this policy, if any; (iii) allocation of trades; and 

(iv) side-by-side management of hedge funds and other products, if applicable. 

3. Please describe your back office systems and capabilities. 

4. How are brokers selected and what are your list of requirements for chosing brokers? 

G. BROKERAGE/SOFT DOLLARS 

1. Over the last 5 years, what is your firm’s percentage of brokerage executed by minorityowned, 

female-owned, and a person with disability-owned broker/dealers? 

2. Please provide a list of all the minority-owned, female-owned and a person with a 

disability-owned broker/dealers used by your firm in 2010 and 2011. 

18

3. Please describe your policy for selecting minority-owned, female-owned and a person 

with a disability-owned broker/dealers. Does this differ from your policy for selecting 

other broker/dealers? How often does broker selection and review occur? 

4. Is your firm willing to meet minority-owned, female-owned and person with a disabilityowned 

brokerage commission goals set forth by CTPF? (This provision requires best 

efforts to comply) 

5. Does your firm use soft dollars? Is so, for what purpose? 

6. What percentage of commissions under this product are soft dollar commissions? 

H. RISK 

1. Please provide a short biography of the person(s) who is (are) responsible for the overall 

risk management of your firm and describe their individual functions. 

2. Who does the person identified in question 1 report to? 

3. Describe internal controls for trading, risk management, and portfolio compliance. Be 

sure to include the firm’s policy on portfolio managers trading for their own accounts. 

10.4 PRODUCT INFORMATION 

A. PERSONNEL 

1. Please provide a list of all key personnel involved in the management of this product (i.e., 

dedicated to the product), including the lead portfolio manager, marketing personnel, and 

research analysts. For each individual, please answer in the format below and attach 

biographies. 

Name Title Education Role at 

Firm 

Yr. Started 

in Industry 

Yr. Started 

with Firm 

Percentage 

of time dedicated 

to this product 

2. Please provide the start date of the current portfolio management team. 

19

3. List in detail the proposed portfolio manager’s other duties and accounts, if any. Please 

include the size and number of portfolios he or she currently manages within this product 

and any other strategies he or she works on. Please state the date that the portfolio 

manager began primary portfolio management duties. Also discuss in detail the portfolio 

manager’s compensation structure. 

4. Describe your firm’s back-up procedures in the event the key investment professional 

assigned to this account should leave the firm or be transferred to other accounts or 

duties. 

5. Please provide personnel additions and terminations by year for all investment 

professionals directly associated with the product for the past three years. 

B. PROPOSED PRODUCT 

1. Please provide the specific name and the inception date of the product under 

consideration. 

2. Select the single most appropriate description of your investment strategy: 

_____ Active/Passive Security Selection 

_____ Fundamental Research (100% Bottom Up) 

_____ Fundamental Research/Risk Control (Bottom Up/Top Down Overlay) 

_____ Macroeconomic/Thematic/Fundamental Research (Top Down/Bottom Up) 

_____ Quantitative 

_____ Other (Explain) ____________________________________________ 

3. Please complete the following table: 

Emerging Markets Equity AUM 

(in millions) 

12/31/11 12/31/10 12/31/09 12/31/08 12/31/07 

4. What is the investment objective of this product? 

5. What benchmark is most appropriate for this product and why? 

6. What is the capacity for this product? 

7. Specify the product’s: 

(a) Excess return range over a full market cycle 

(b) Expected or targeted tracking error range 

(c) Expected or targeted information ratio 

(d) Anticipated beta 

20

C. ASSETS UNDER MANAGEMENT 

1. Please fill out the following tables for the product in question: 

Account Type 

Corporate 

Public Fund 

Union/multi-employer 

Foundation and endowment 

Insurance 

High-net-worth individuals 

Wrap accounts 

Sub-advised assets 

Other, please explain 

Total 

Assets in Millions 

as of 12/31/11 

Number of Accounts 

as of 12/31/11 

Vehicle Type 

Separate account 

Commingled fund 

Mutual fund: institutional class 

Mutual fund: retail class 

Assets in Millions 

as of 12/31/11 

Number of Accounts 

as of 12/31/11 

2011 

2010 

2009 

2008 

2007 

2006 

2005 

2004 

Number 

Of 

Accounts 

Accounts Gained 

Assets in 

Millions 

% of 

Product 

Assets 

Number 

Of 

Accounts 

Accounts Lost 

Assets in 

Millions 

% of 

Product 

Assets 

21

2003 

2002 

2001 

2000 

2. Please discuss the reasons for the lost accounts indicated in the table above. 

3. Please provide a representative client list for this product . 

D. INVESTMENT PHILOSOPHY AND PROCESS 

1. Please briefly describe your firm’s investment philosophy. How has it changed since the 

inception of this product? How does your process add value? Explain what makes your 

philosophy and process unique. 

2. For the subject product, provide approximate percentages of expected value added versus 

the appropriate benchmark for the following factors: 

Description Weight (%) 

Asset Allocation 

Industry/Sector Allocation 

Risk Control 

Theme Selection 

Security Selection 

Trading 

Total 100% 

3. Please describe the role of top-down economic, thematic, and/or sector allocation 

decisions in your investment process, and how these decisions are made and 

implemented. 

4. Please discuss your firm’s investment strategy, screening processes, research process, and 

security selection. Please be specific in your discussion of your research process, 

including the use of fundamental, technical, and quantitative analysis. 

5. Please describe the portfolio construction process. Specify the portfolio guidelines, such 

as the maximum issue and sector weights. Describe any quantitative techniques or 

optimization tools used to construct portfolios. 

6. Please describe the portfolio manager’s ability to invest in any out-of-benchmark 

securities. 

7. Please describe how your firm measures portfolio risk. How is it monitored and 

controlled, state whether it is on an absolute or relative basis. 

22

8. Do you stress test your portfolios? If so, how? 

9. Please discuss your firm’s sell discipline. Include the use of price targets and 

absolute/relative sell disciplines. 

10. Are portfolios managed by individual managers or teams? 

11. To what extent does this product use leverage and derivatives? Please explain. 

12. Do portfolio managers follow a model portfolio, and if so, to what extent are individual 

portfolio managers permitted to deviate from the model portfolio? 

13. Please describe the process used to allocate investments between separate account clients 

and other account types. 

14. How frequently are investment policy or strategy meetings held? 

15. Describe under what market conditions you expect your product to do well and to do 

poorly. Describe what, if any, exposure you have to momentum. 

E. PORTFOLIO CHARACTERISTICS AND SECTOR WEIGHTINGS 

1. Please fill out the following tables for the product in question: 

Emerging Markets Strategy as of 12/31/11 

One year average number of holdings for this product 

5 year historical range of number of holdings 

5 year average annual turnover (by weight) for this product 

Turnover range for this product 

One year average cash position 

5 year historical range in cash for this product 

% of Portfolio 

Style Exposure 12/31/11 5 Year Min 5 Year Max Allowable Range 

Growth 

Core 

Value 

Total 100% 100% 100% 100% 

23

Representative Account Fundamental Characteristics as of 12/31/11 

Current dividend yield 

P/E (trailing 12 months) 

P/E (forward 12 months) 

P/B 

P/S 

LTD/Total Capital 

D/E 

P/Cash Flows (trailing 12 months) 

Dividend yield 

5-Year ROE 

Earnings growth (past 5 years) 

Earnings growth (next 5 years) 

Avg. weighted market cap 

Weighted median market cap 

Range of market cap in current portfolio 

2. Please fill out of the following allocation table: 

MSCI Global Industry Classification Standard, 

Excluding Cash (Invested Portfolio Only) 

Sector 

% of Portfolio 

as of 12/31/11 

Consumer discretionary 

Consumer staples 

Energy 

Financials 

Health care 

Industrials 

Information technology 

Materials 

Telecom services 

Utilities 

Other 

Total 100% 

24

3. What is the distribution of your portfolios managed in this investment approach 

according to the following capitalization ranges (in U.S. dollars) for the last five years? 

% of Portfolio by Year 

Range 2011 2010 2009 2008 2007 

$0 to $1.5 billion 

$1.5 billion to $10 billion 

$10 billion + 

Total 100% 100% 100% 100% 100% 

4. Please list all of the countries currently in the portfolio and their allocation. 

F. FEES AND ACCOUNT MINIMUMS 

1. Please list your fee schedule for this product. Please include standard fees and/or 

performance-based fees if offered. If performance based fees are offered please provide 

the basis for those fees, and any other fees that may be applicable to the running of this 

account. 

2. Does your firm charge a minimum annual fee? If so, what is that fee? Will it stay the 

same or change in the future based on some formula? 

3. Under what circumstances are fees negotiable? 

4. What is your billing frequency? 

5. What is the minimum account your firm will accept? 

10.5 PERFORMANCE 

A. PERFORMANCE 

1. Is the product’s track record from a previous firm? If yes, provide name of previous firm. 

2. Is the product’s track record a simulated track record? If yes, provide dates for when 

simulated track record began and ended. 

3. Has this portfolio historically been reported to the Callan database group? 

25

4. Is your firm GIPS® compliant? 

5. If your firm is GIPS® compliant, please attach a GIPS®-compliant presentation for this 

product and skip this table. 

If your firm is not GIPS® compliant, fill out the following table. Please identify which 

benchmark you are using: _____________________________________________ 

Year 

2011 

2010 

2009 

2008 

2007 

2008 

2005 

2004 

2003 

2002 

2001 

Gross of 

Fees 

Return 

(%) 

Net of 

Fees 

Return 

(%) 

Benchmark 

Return 

(%) 

Number 

of 

Portfolios 

Internal 

Dispersion 

(%) 

Total 

Composite 

Assets 

Total 

Firm 

Assets 

6. Please provide gross and net of fees quarterly returns since the product’s inception in the 

following format: 

Quarter 

4Q11 

3Q11 

2Q11 

1Q11 

..... 

Gross of 

Fees 

Return 

(%) 

Net of 

Fees 

Return 

(%) 

Benchmark 

Return 

(%) 

B. GIPS® COMPLIANCE 

Please respond to Questions 1–2 if your firm is GIPS® compliant. 

26

1. How many years has your firm been GIPS® compliant? 

2. Has your firm been verified? Please specify the name of your verifier and provide a 

verification letter. Please provide the number of years your firm has been verified. 

Please respond to Questions 3–13 if your firm is not GIPS® compliant: 

3. Please name and define the composite for the strategy that is the subject of this RFP. 

4. When presenting gross of fees returns, please disclose if any other fees are deducted in 

addition to trading expenses. 

5. When presenting net of fees returns, please disclose exactly what other fees are deducted 

in addition to the investment management fees and trading expenses. 

6. If your firm uses a custom benchmark, please describe the benchmark and the process 

and rationale behind the creation of this benchmark. 

7. Please include a measure of dispersion used for each composite, including the reason why 

that measure of dispersion was chosen. 

8. Please disclose your firm’s treatment of interest income. 

9. Please disclose the policy used to allocate cash to carve-out returns, if applicable. 

10. Please disclose the use of any subadviser(s) and the periods used. 

11. Is there a minimum asset level below which portfolios are not included in a composite? 

If so, what is that level? 

12. Is additional information regarding policies for calculating and reporting returns available 

upon request? 

13. Please disclose if your firm does not value portfolios at the end of each month (i.e., either 

the last day of the month or the last business day of the month). If so, please explain why 

not. 

27

REFERENCES 

1. Please provide three U.S. tax-exempt plan sponsors invested in the international 

emerging markets product. Please provide the names, addresses, telephone numbers, size 

of the accounts, and dates the accounts commenced. (Appendix J) 

2. Please provide three U.S. tax-exempt plan sponsors that terminated your firm’s 

international emerging markets product. Please provide the names, addresses, telephone 

numbers, size of the accounts, and dates the accounts commenced and ended. (Appendix 

J) 

APPENDIXES TO QUESTIONNAIRE 

Appendix A - 

Appendix B - 

Appendix C - 

Appendix D - 

Appendix E- 

Appendix F- 

Appendix G - 

Appendix H - 

Appendix I - 

Appendix J - 

Organizational Charts 

Financial Statements 

ADV Part I and II 

Business Continuation/Disaster Recovery Policies and Procedures 

Conflict of Interest Policy and Description of Policy Enforcement 

Procedures 

Code of Ethics Policy and Compliance Procedures 

Evidence of Errors and Omissions Insurance 

Evidence of Fiduciary Liability Insurance 

Evidence that Firm is Bonded 

References 

28

Exhibit A 

Disclosure Schedule 

The Investment Manager warrants and represents to CTPF as follows: 

There are no direct and indirect fees, commissions, penalties, and other compensation, 

including reimbursement for expenses, that may be paid by or on behalf of the Investment 

Manager in connection with the provision of services to CTPF, except as follows: 

(If none, state “none”) 

1. The following is a true, accurate and complete list of the names and addresses of 

(i) the Investment Manager; (ii) each entity that is a parent of, or owns a controlling interest in, 

the Investment Manager; (iii) each entity that is a subsidiary of, or in which a controlling interest 

is owned by, the Investment Manager; (iv) all persons who have an ownership or distributive 

income share in the Investment Manager that is in excess of 7.5%; and (v) each person who 

serves as an executive officer of the Investment Manager: 

(i) 

(ii) 

(iii) 

(iv) 

(v) 

2. The following is a true, accurate and complete list of the names and addresses of 

all subcontractors, if applicable, and the expected amount of money each will receive under the 

contract, including an acknowledgment that the contractor must promptly make notification, in 

writing, if at any time during the term of the contract a contractor adds or changes any 

subcontractors. (For purposes of this paragraph “subcontractor” does not include non-investment 

related professionals or professionals offering services that are not directly related to the 

investment of assets, such as legal counsel, actuary, proxy-voting services, services used to track 

compliance with legal standards, and investment fund of funds where the board has no direct 

contractual relationship with the investment advisers or partnerships.) 

(If none, state “none”) 

3. The Investment Manager acknowledges that it is familiar with the provisions of 

Sections 1-135 and 1-145 of the Code, which read in their entirety as follows: 

29

Sec. 1-135. Fraud. Any person who knowingly makes any false statement or falsifies or 

permits to be falsified any record of a retirement system or pension fund created under 

this Code or the Illinois State Board of Investment in an attempt to defraud the retirement 

system or pension fund created under this Code or the Illinois State Board of Investment 

is guilty of a Class 3 felony. (40 ILCS 5/1-135) 

Sec. 1-145. Contingent and placement fees prohibited. No person or entity shall retain a 

person or entity to attempt to influence the outcome of an investment decision of or the 

procurement of investment advice or services of a retirement system, pension fund, or 

investment board of this Code for compensation, contingent in whole or in part upon the 

decision or procurement. Any person who violates this Section is guilty of a business 

offense and shall be fined not more than $10,000. In addition, any person convicted of a 

violation of this Section is prohibited for a period of 3 years from conducting such 

activities. (40 ILCS 5/1-145) 

30

Exhibit B 

High Risk Home Loan Act Certification 

Under Public Act 095-0521, for an Illinois finance entity to be eligible to invest or deposit CTPF funds, it 

must annually certify that it complies with the High Risk Home Loan Act. 

An Illinois financial entity is defined in Public Act 095-0521 as any entity chartered under the Illinois 

Banking Act, the Savings Bank Act, the Illinois Credit Union Act or the Illinois Savings and Loan Act of 

1985, and any person or entity licensed under the Residential Mortgage License Act of 1987, the 

Consumer Installment Loan Act or the Sales Finance Agency Act. 

Using the definition of an Illinois financial entity given above, please advise us of your status by checking 

the appropriate box on the certification page. 

31

High Risk Home Loan Act Certification 

Yes, we are an Illinois finance entity as defined in Public Act 095-0521. 

(Please complete the Certification of Compliance Illinois High Risk Home Loan 

Act form on next page.) 

No, we are not an Illinois finance entity as defined in Public Act 095-0521. 

(Please skip the Certification of Compliance Illinois High Risk Home Loan 

Act form below.) 

INVESTMENT MANAGER / CONSULTANT: 

Company Name: 

Signature: 

Printed Name 

Title: 

Dated: 

Public Act 095-0521 

32


Certification of Compliance 

Illinois High Risk Home Loan Act 

I, __________________________, serving in the capacity of _______________________, on this ____ 

day of _______________, 20 ____, being duly sworn and having knowledge of all matters set forth 

herein, state, affirm and certify as follows: 

1. I represent ______________________________________________, and I am duly 

authorized to provide this certificate on its behalf. 

2. I am aware of the requirements of Section 1-110.10 of the Illinois Pension Code (40 

ILCS 5/1-110.10), as well as the requirements of the High Risk Home Loan Act, (Act), 

and any rules adopted pursuant thereto. 

3. Under the terms of the Illinois Pension Code, ____________________________________ 

is deemed an Illinois Finance Entity. 

4. I am aware that no pension fund assets may be handled by the Illinois Finance Entity if 

it is not in compliance with the provisions of the High Risk Home Loan Act, including 

the filing of a completed certification with the Chicago Teachers’ Pension Fund. 

5. I certify that ______________________________________ is in compliance with all the 

requirements of the High Risk Loan Act and the rules adopted pursuant to the Act. 

______________________________ 

(Firm) 

______________________________ 

(Signature) 

______________________________ 

(Name of Officer) 

______________________________ 

(Title) 

Subscribed and sworn before me by ________________ on this ____ day of _______________, 2011. 

_________________________________________ 

Notary 

My Commission Expires:___________________ 

(Seal) 

(Firm) 

State of _____________________ ) 

County of ___________________ ) 

33

Exhibit C 

The Illinois Governmental Ethics Act Certification 

Disclosure Pursuant to Public Act 96-0006 

40 ILCS 5/1-113.14(e), enacted by the General Assembly as part of Public Act 96-0006 and effective as of 

January 1, 2010, provides as follows: 

(e)… each investment adviser or consultant currently providing 

services or subject to an existing contract for the provision of services must 

disclose to the board of trustees all direct and indirect fees, commissions, 

penalties, and other compensation paid by or on behalf of the investment adviser 

or consultant in connection with the provision of those services and shall update 

that disclosure promptly after a modification of those payments or an additional 

payment. The person shall update the disclosure promptly after a modification 

of those payments or an additional payment. The disclosures required by this 

subsection (e) shall be in writing and shall include the date and amount of each 

payment and the name and address of each recipient of a payment. 

Pursuant to the foregoing, the undersigned (“Investment Manager or Consultant”) covenants, warrants and 

represents to the Trustees of the Chicago Teachers’ Pension Fund (“CTPF”) as follows: 

1. Investment Manager /Consultant and the Chicago Teachers’ Pension Fund (CTPF) are parties to 

an Investment Advisory Agreement dated 

(the “Agreement”), pursuant to which Investment 

Manager/Consultant provides investment advisory services to CTPF. 

2. There have been no direct or indirect fees, commissions, penalties, or other compensation, 

including reimbursement for expenses, paid by or on behalf of your firm in connection with the provision of services 

to CTPF pursuant to the Agreement, except as follows (If none, state “none”; otherwise state the date and amount 

of each payment and the name and address of each recipient of a payment): 

_________________________________________________________________________________ 

______________________________________________________________________________ 

______________________________________________________________________________ 

3. Investment Manager shall update the above disclosure promptly after a modification of those 

payments or an additional payment. 

INVESTMENT MANAGER: 

Company Name: 

Signature: 

Printed Name 

Title: 

Dated: 

Public Act 096-0006 

Certification – 2010 

34

Exhibit D 

Investment Management Agreement 

INVESTMENT MANAGEMENT AGREEMENT 

THIS INVESTMENT MANAGEMENT AGREEMENT (“Agreement”), made the 

day of 

by and between _______________________________________(the “Investment Manager”) and the 

Board of Trustees of the PUBLIC SCHOOL TEACHERS’ PENSION AND RETIREMENT FUND OF 

CHICAGO (“Fund”), a governmental retirement system established pursuant to the laws of the State of 

Illinois. 

WITNESSETH: 

WHEREAS, pursuant to 40 ILCS 5/1-109/1, the Board of Trustees may appoint one or more 

investment managers or investment advisers as fiduciaries to manage, including the power to acquire and 

dispose of, any assets of the Fund; and 

WHEREAS, the Board of Trustees identified a need for an investment manager to manage a 

certain portion of the Fund’s assets; and 

WHEREAS, a description of the services to be performed, the need for services, the qualifications 

necessary, and the plan for post-performance review are set forth in the Investment Guidelines attached 

to this Agreement; and 

WHEREAS, in compliance with its Procurement Policy, the Board of Trustees voted to appoint 

the Investment Manager as an investment manager for a portion of the Fund’s assets based on the 

Fund’s need and the Investment Manager’s qualifications; and 

WHEREAS, the Investment Manager agrees to act as an investment manager in accordance with 

the terms of 40 ILCS 5/1-101, et. seq. and 40 ILCS 5/17-101, et. seq. and with the terms of this 

Agreement; 

NOW, THEREFORE, the Board of Trustees and the Investment Manager agree as follows: 

Section 1. 

Appointment of Investment Manager 

35

A. Pursuant to 40 ILCS 5/1-109.1, the Board of Trustees hereby appoints the Investment 

Manager to exercise its sole discretion and authority to direct the Northern Trust 

Company, as Master Custodian pursuant to the Master Custody Agreement entered into 

on October 25, 1989, between the Board of Trustees, the Treasurer of the City of 

Chicago, and the Northern Trust Company, to invest and reinvest in cash, cash 

equivalents, stocks, bonds, or other securities, and other instruments, of such portion of 

the Fund’s assets (hereinafter referred to as “Master Trust assets”) as the Board of 

Trustees shall decide from time to time, the proceeds from the sale of such assets, and 

the income due and appreciation attributable to such assets, less any assets the Board of 

Trustees may withdraw from time to time. For purposes of this Agreement, any such 

portion of the Master Trust assets shall be referred to as the “Sub-Account”. The 

Investment Manager shall for all purposes be deemed an independent contractor, and, 

unless otherwise expressly authorized or provided, shall not have authority to act for or 

represent either the Fund or the Board of Trustees in any way or otherwise be deemed 

an agent of either the Fund or the Board of Trustees. 

B. The Investment Manager hereby accepts its appointment and acknowledges that, at all 

times, it will act as a fiduciary in accordance with the Illinois Pension Code and this 

Agreement with respect to the Fund and the Sub-Account. 

C. Subject to this Agreement, the Investment Manager may, in its full discretion and without 

obligation on its part to give prior notice to the Master Custodian or the Board of 

Trustees: (i) buy, sell, exchange, convert, tender and otherwise trade in any stocks, 

bonds or other securities or instruments permitted by the Investment Guidelines; and (ii) 

execute transactions through accounts established with such brokers or dealers as the 

Investment Manager may in its sole discretion select, except to the extent otherwise 

directed by the Board of Trustees in writing; provided, however, that all such activities 

shall be conducted in a manner consistent with the Investment Manager’s fiduciary duties 

under Article 1 of the Illinois Pension Code, under this Agreement, and under the 

Employee Retirement Income Security Act of 1974, interpretations thereof and 

36

egulations and exemptions thereunder (collectively, hereinafter “ERISA”), even though 

the Fund itself is exempt from the requirements of ERISA. The Board of Trustees has 

directed the Master Custodian, and the Master Custodian has agreed, to act in 

accordance with the instructions of the Investment Manager. Title to all assets in the 

Sub-Account shall at all times be registered in the name of the Fund or the name of the 

Master Custodian or its nominee for the account of the Fund, and the indicia of ownership 

of all assets in the Sub-Account shall at all times be maintained in trust by the Master 

Custodian. The Investment Manager shall at no time have custody of or physical control 

over the Sub-Account. The Investment Manager shall not be liable for any act or 

omission of the Master Custodian unless it knew or should have known that the act or 

omission was a breach of the Master Custodian’s obligations to the Fund. 

D. Cash held in the Sub-Account pending direction from the Investment Manager may be 

invested and reinvested by the Master Custodian, without instruction or direction from the 

Investment Manager, in U.S. Treasury bills and other short-term, liquid investments. 

Section 2. 

Investment Guidelines 

A. The Fund’s investment guidelines for the Sub-Account (referred to herein as the 

“Investment Guidelines”) have been provided to the Investment Manger and are attached 

and incorporated by reference herein as Exhibit A. 

B. The Investment Guidelines and other relevant policies of the Fund are subject to change, 

and the Board of Trustees shall advise the Investment Manager with respect to any 

amendment of such Investment Guidelines or policies. The Investment Manager will not 

be held liable to the Fund for non-compliance with any amendment to the Investment 

Guidelines or policies if the Board of Trustees fail to advise the Investment Manager of 

such amendment. 

C. The Investment Manager shall recommend to the Board of Trustees any material 

changes to the Investment Guidelines it deems appropriate or necessary. 

37

Section 3. 

Standard of Care 

A. As a fiduciary, the Investment Manager shall perform its duties hereunder with the care, 

skill, prudence and diligence under the circumstances then prevailing that a prudent 

person acting in a like capacity and familiar with such matters would use in the conduct of 

an enterprise of a like character and with like aims. 

B. The Investment Manager shall diversify the assets in the Sub-Account so as to minimize 

the risk of large losses unless under the circumstances it is clearly imprudent to do so. 

C. The Investment Manager shall discharge its duties hereunder with respect to the Fund 

and the Sub-Account solely in the interest of, and for the exclusive purpose of providing 

benefits for, the Fund’s beneficiaries. 

D. The Investment Manager shall not engage in any transaction involving the Fund or the 

Sub-Account that would constitute a non-exempt prohibited transaction under Section 

406 of ERISA or 40 ILCS 5/1-110. 

E. The Investment Manager shall make every reasonable effort to not make investments 

that would generate unrelated business taxable income for an entity that is exempt under 

Section 501(a) of the Internal Revenue Code. 

Section 4. 

Representations, Warranties and Covenants of the Investment Manager 

A. The Investment Manager represents and warrants to the Board of Trustees that it is 

registered and shall remain registered as an investment adviser or that it is a bank, as 

defined in the Investment Advisers Act of 1940. 

B. Pursuant to Section 5/1-113.14 of the Illinois Pension Code the Investment Manager 

acknowledges that it is a “fiduciary” with respect to the Fund and the Sub-Account within 

the meaning of the Illinois Pension Code, and specifically agrees to perform all of its 

duties and obligations under this Agreement as a fiduciary. The Investment Manager 

further warrants that none of the disqualifications described in Section 411 of ERISA 

apply to the Investment Manager. 

C. The Investment Manager represents and warrants that all statements made and 

materials provided to the Fund in response to the Fund’s search for an investment 

38

adviser, which resulted in the Fund and the Investment Manager entering into this 

Agreement, were true and complete. The Investment Manager shall also be subject to 

40 ILCS 5/1-135. 

D. The Investment Manager represents and warrants that it shall secure and maintain at all 

times during the term of this Agreement a blanket fidelity bond or bonds in the minimum 

amount of $5,000,000. If the Investment Manager maintains a blanket fidelity bond or 

bonds in an amount greater than $5,000,0000, the Investment Manager shall maintain 

such greater amount for the term of this Agreement. In addition, the Investment Manager 

shall secure and maintain at all times during the term of this Agreement a bond 

complying with the requirements of ERISA in the amount of $500,000, with the Fund as 

the designated insured party. A certificate confirming the bonds shall be provided to the 

Board of Trustees in December of each year. The Investment Manager also 

acknowledges that the Board of Trustees may require the Investment Manager to secure 

and maintain additional blanket fidelity bond coverage. The Investment Manager agrees 

that, upon the Board of Trustees’ request, the Investment Manager shall obtain additional 

blanket fidelity bond coverage in the amount of and pursuant to the terms and conditions 

established by the Board of Trustees for similarly situated investment managers 

managing assets of the Fund. 

E. The Investment Manager represents and warrants that it shall secure and maintain at all 

times errors and omissions insurance in the minimum amount of $10,000,000. Insurance 

in effect will be determined annually and will be a minimum of 10% of the portfolio value 

at December 31st of each year. If the Investment Manager maintains errors and 

omissions insurance in an amount greater than the amount required, the Investment 

Manager shall maintain such greater amount for the term of this Agreement. A certificate 

of insurance with respect thereto shall be provided to the Board of Trustees in December 

of each year. The Investment Manager also acknowledges that the Board of Trustees 

may require the Investment Manager to secure and maintain additional errors and 

omissions insurance. The Investment Manager agrees that, upon the Board of Trustees 

39

equest, the Investment Manager shall obtain additional errors and omissions insurance 

coverage in the amount of and pursuant to the terms and conditions established by the 

Board of Trustees for similarly situated investment managers managing assets of the 

Fund. 

F. The Investment Manager agrees to provide notice within seven (7) days of receipt of a 

notice of cancellation of either the fidelity bond(s) or the errors and omissions insurance 

coverage set forth in Paragraphs (D) and (E) of this Section. The Investment Manager 

further agrees that there will be no “prior acts” exclusion in the event of any change in 

either the fidelity bond(s) or errors and omissions insurance policies or the insurance 

company or companies providing such bond(s) or policies. 

G. The Investment Manager agrees to notify the Board of Trustees and its investment 

consultant in writing within five (5) business days of any material changes in the portfolio 

manager for the Sub-Account or any legal actions instituted against the Investment 

Manager involving the investment of securities or of any investigations, examinations, or 

other proceedings commenced by any governmental regulatory agency which are not 

either conducted in the ordinary course of Investment Manager’s business or conducted 

as part of an industry sweep or other fact-finding related inquiry. 

H. Pursuant to Section 1-113.14(c) of the Illinois Pension Code, the Investment Manager 

has disclosed in writing the names and addresses of the following persons or entities 

(hereinafter referred to as the “Investment Manager Disclosures,” which is attached and 

incorporated herein as Exhibit B): (i) any entity that is a parent of, or owns a controlling 

interest in, the Investment Manager, (ii) any entity that is a subsidiary of, or in which a 

controlling interest is owned by, the Investment Manager, (iii) any persons who have an 

ownership or distributive income share in the Investment Manager that is in excess of 

seven and one-half percent (7.5%), or (iv) serves as an executive officer of the 

Investment Manager. The Investment Manager further acknowledges that it shall 

promptly notify the Fund, in writing, if at any time during the term of this Agreement, the 

information contained in the Investment Manager Disclosures changes. 

40

I. The Investment Manager has further disclosed in the Investment Manager Disclosures, 

the names and addresses of all of its subcontractors, including any third-party marketers, 

if applicable, and the expected amount of money each will receive under this Agreement. 

The Investment Manager further acknowledges that it shall promptly notify the Fund, in 

writing, if at any time during the term of this Agreement, the Investment Manager adds or 

changes any subcontractors. The term subcontractor, as used herein, does not include 

non-investment related professionals or professionals offering services that are not 

directly related to the investment of assets, such as legal counsel, actuary, proxy-voting 

services, and services used to track compliance with legal standards. 

J. The Investment Manager shall comply with all applicable laws of the State of Illinois and 

the United States of America, and any applicable governmental or regulatory authority 

outside of the United States. Regulatory reports required under laws applicable to the 

Investment Manager by any regulatory authority shall be the sole responsibility of the 

Investment Manager. 

K. To the fullest extent permitted under applicable law and notwithstanding any other 

provision of this Agreement, the Investment Manager shall indemnify and hold harmless 

the Board of Trustees and the Fund, including its employees and agents, for, from and 

against any losses, damages, costs and expenses (including but not limited to 

reasonable attorneys’ fees, judgments, fines, and amounts paid in settlement) incurred as 

the result of the Investment Manager’s breach of this Agreement. Notwithstanding the 

foregoing, no indemnified party hereunder shall be entitled to indemnification to the 

extent that any such loss was directly caused by such party’s own gross negligence or 

willful misconduct. 

L. The Investment Manager shall furnish to the Board of Trustees, from time to time, 

evidence as the Board of Trustees may reasonably request that the Investment Manager 

satisfies and continues to satisfy the foregoing requirements. The Investment Manager 

shall promptly notify the Board of Trustees if it has reason to believe that any of the 

foregoing representations, warranties or covenants may cease to be satisfied. 

41

Section 5. 

Representations and Warranties of the Board of Trustees 

A. The Board of Trustees represents and warrants to the Investment Manager that the 

Board of Trustees is a fiduciary authorized to enter into this Agreement and to appoint the 

Investment Manager as its investment manager in accordance with the terms hereof and 

that the person executing this Agreement for and on behalf of the Board of Trustees is 

authorized to do so. 

B. The Board of Trustees represents and warrants to the Investment Manager that if another 

entity should be substituted for the Master Custodian as custodian of the Master Trust 

assets, the Board of Trustees shall promptly notify the Investment Manager of such 

substitution and the substituted entity will thereafter be deemed to be the Master 

Custodian for purposes of this Agreement. 

C. The Board of Trustees represents and warrants to the Investment Manager that it has 

received a copy of the Investment Manager’s ADV Part II within forty-eight (48) hours 

prior to the execution of this Agreement. 

D. The Board of Trustees represents and warrants to the Investment Manager that, as a 

fiduciary, it is responsible for assuring the Fund’s Investment Guidelines are prudent for 

the Fund’s assets. 

E. The Board of Trustees represents and warrants to the Investment Manager that the 

decision to allocate any Master Trust assets to the Sub-Account is solely the 

responsibility of the Board of Trustees and is independent of the Investment Manager’s 

fiduciary responsibilities as established pursuant to this Agreement. 

F. The Board of Trustees represents and warrants to the Investment Manager that it has 

determined that the initial investment of the Master Trust assets in the Sub-Account 

satisfies the applicable provisions of Illinois law. 

G. The Board of Trustees represents and warrants to the Investment Manager that the 

Investment Manager is responsible for diversification or investment requirements 

applicable to the Master Trust assets allocated to the Sub-Account only, and not to the 

Master Trust assetsas a whole. 

42

H. The Board of Trustees represents and warrants to the Investment Manager that the Fund 

is qualified under Section 414(d) of the Internal Revenue Code of 1986 as a 

governmental plan. 

Section 6. 

Securities and Foreign Exchange Transactions 

Securities and, if permitted by the Investment Guidelines, foreign exchange transactions 

in respect of the Sub-Account shall be made directly to or from the Master Custodian at 

the direction of the Investment Manager. Securities and foreign exchange instructions 

from the Investment Manager to the Master Custodian shall be made in an electronic 

format as agreed upon between the Master Custodian and the Investment Manager, with 

the approval of the Fund. 

Section 7. 

Reports; Meetings 

A. The Board of Trustees shall cause the Master Custodian to provide the Investment 

Manager with monthly reports concerning the status of the Sub-Account, and such 

reports from the Master Custodian shall constitute the principal record of the Sub- 

Account for all purposes of this Agreement, including but not limited to, the calculation of 

the Investment Manager’s fees to be paid. 

B. With respect to the Sub-Account, the Investment Manager shall provide the Board of 

Trustees and its investment consultant with, inter alia: on a monthly basis, confirmations 

of all transactions; a monthly summary of the performance of the Sub-Account; a 

quarterly summary of returns on investments, including gross and net returns on 

investments after payment of all fees, commission and other compensation; a monthly 

report on brokerage activity; an annual report, as provided for in Section 11 herein, 

regarding the voting of proxies, if any, during a year; an annual report within forty-five 

(45) days after the end of each calendar year containing a detailed statement of the 

affairs of the Sub-Account, including its income and expenditures and assets and 

liabilities (calculated in accordance with generally accepted accounting principles); an 

annual statement of all sums paid to the Fund’s investment consultant or its affiliates for 

conferences, consulting services, brokerage commissions, or for any other purpose, as 

43

well as a statement of all such sums paid within the last five (5) years; and all other 

reports, which are mutually agreeable to the Investment Manager that the Board of 

Trustees or its investment consultant may reasonably request from time to time. 

C. The Investment Manager shall, on at least a monthly basis, reconcile the Sub-Account’s 

market value, income earned, and transaction activity as reported by the Master 

Custodian with the records of the Investment Manager. The Investment Manager shall 

communicate the differences to the Master Custodian in a timely manner. Resolution of 

differences is the responsibility of the Investment Manager and the Master Custodian. 

The Investment Manager is responsible for notifying the Board of Trustees as soon as 

reasonably possible of unresolved discrepancies between the Investment Manager’s 

records and those of the Master Custodian. The records of the Master Custodian shall 

be the authoritative source for all purposes under this Agreement. 

D. The Board of Trustees and the Investment Manager shall meet periodically, at such times 

as the Board of Trustees may reasonably request, concerning the Sub-Account. 

Section 8. 

Services to Other Clients 

A. It is understood that the Investment Manager performs investment advisory services for 

various clients. The Board of Trustees agrees that the Investment Manager may give 

advice and take action with respect to any of its other clients which may differ from the 

advice given to, or the timing or nature of action taken with respect to, the Sub-Account, 

provided that the Investment Manager allocates investment opportunities among clients 

on a fair and equitable basis and in accordance with applicable federal regulations. 

B. Nothing in this Agreement shall impose any obligation on the Investment Manager to 

purchase or sell, or to recommend for purchase or sale, any security which the 

Investment Manager, its principal affiliates, or its employees may purchase or sell for its 

or their own accounts or for the account of any other client. 

Section 9. 

Allocation of Brokerage 

A. Subject to the terms of the Illinois Pension Code and to the Fund’s Brokerage Guidelines, 

which are attached and incorporated by reference as Exhibit C, the Investment Manager 

44

is authorized to place orders for the execution of securities transactions for the Sub- 

Account with or through such brokers or dealers as the Investment Manager may select. 

B. The Investment Manager may allocate transactions to brokers or dealers for execution on 

markets, at such prices and at such commission rates as, in the good faith judgment of 

the Investment Manager, will be in the best interest of the Fund, taking into consideration 

in the selection of such brokers or dealers not only the available prices and rates of 

brokerage commissions in the industry, but also other relevant factors, including but not 

limited to execution capabilities, and, subject to the following sentence, research services 

provided by such brokers or dealers which are expected to enhance directly the 

capabilities of the Investment Manager to serve the Fund. All services provided to the 

Investment Manager for commissions paid in connection with Fund transactions shall 

satisfy the requirements of Section 28(e) of the Securities Exchange Act of 1934 and the 

requirements and restrictions relating to the payment of commissions for the provision of 

such services under laws applicable to employee benefit plans that are subject to ERISA. 

Securities transactions may not be executed through the facilities of the Investment 

Manager or its affiliates unless expressly authorized by the Board of Trustees. The Board 

of Trustees agrees that the Investment Manager may aggregate sales and purchase 

orders of securities held in the Sub-Account with similar orders being made 

simultaneously for other portfolios managed by the Investment Manager if, in the 

Investment Manager’s reasonable judgment, such aggregation shall result in an overall 

economic benefit to the Sub-Account, taking into consideration the advantageous selling 

or purchase price, brokerage commission and other expenses, and trading requirements. 

In accounting for such an aggregated order, price and commission shall be averaged on 

a per-bond, share or other applicable unit basis daily. The Board of Trustees 

acknowledges that the Investment Manager’s determination of such economic benefit to 

the Sub-Account is based on an evaluation that the Sub-Account is benefited by relatively 

better purchase or sales prices, lower commission or other transaction expenses and 

45

eneficial timing of transactions, or a combination of these and other like or unlike 

factors. 

Section 10. 

Log of Brokerage Transactions 

The Investment Manager shall maintain and make available to the Board of Trustees a 

log of all transactions placed through all securities brokerage firms, which reflects the 

name of the firm, a description of each transaction including the amount and securities 

involved, the date and time of each transaction, and the amount of fees and commissions 

paid. 

Section 11. 

Proxy Voting 

The Investment Manager shall exercise the fiduciary responsibility for voting all proxies, if 

any, which are solicited in connection with the Sub-Account. Subject to the Investment 

Manager’s oversight, the Investment Manager is authorized to delegate the research, 

voting and record keeping of proxies to a third-party designee (“Designee”) provided that 

the Designee acknowledges in writing its fiduciary status to the Fund and abides by the 

applicable terms of this Agreement. The Investment Manager shall also be responsible 

for making all elections in connection with any mergers, acquisitions, tender offers, 

bankruptcy proceedings, or other similar occurrences, which may affect the Sub-Account, 

but it is not authorized to or responsible for initiating or responding to any legal 

proceedings on behalf of the Sub-Account, including, but not limited to, filing or 

responding to any class action claims related to a holding in the account. The Investment 

Manager shall instruct the Master Custodian or Designee to forward to the Investment 

Manager all communications received by the Master Custodian or Designee including 

proxy statements and proxy ballots duly executed by the Master Custodian or Designee. 

If applicable, the Investment Manager agrees to provide the Board of Trustees with an 

annual statement of the Investment Manager’s proxy voting policies and a summary of 

how the Fund’s proxies were cast. The summary shall include the following information: 

the company in which the Fund had the right to cast proxies, the meeting date for the 

vote, the shareholder of record date, the number of shares voted, an issue identification 

46

number (if any), the recommendation(s) of the Board of Directors, and how the Fund’s 

proxies were cast. The Investment Manager and the Master Custodian or Designee shall 

reconcile the proxies solicited with the Fund’s holdings as of the record date. 

Section 12. 

Fees 

A. The Investment Manager’s compensation shall be determined in accordance with the Fee 

Schedule, attached hereto and incorporated by reference as Exhibit D, and such 

compensation shall be payable quarterly in arrears at a rate determined by the average 

value of the assets as reported by the Master Custodian in the Sub-Account on the last 

business day of each month in the quarter. The fees paid to the Investment Manager 

shall be the sole cost charged to the Fund for the Investment Manager’s services. 

B. Neither the Investment Manager nor any of its affiliates will receive any brokerage 

commissions on the purchase or sale of Fund assets or any other fees or compensation 

in connection with services provided hereunder, except as provided in this Agreement. 

C. The Investment Manager represents that no other current client having the same 

investment objective (other than sub-advisory clients and clients with fees based on 

performance) obtained prior to or subsequent to the Fund will be charged a lower fee for 

managing substantially the same amount of assets in substantially the same manner 

(determined by reference to assets measured at the end of each calendar quarter). The 

Investment Manager agrees to promptly notify the Board of Trustees if it provides more 

favorable fees to any such other client. The Investment Manager agrees that, on the 

effective date of such an occurrence, the more favorable fee structure shall be applied to 

this Fund in lieu of Exhibit D. 

Section 13. 

Valuation 

When applicable, in computing the market values of all common and preferred stocks in 

the Sub-Account, each such security listed on any national securities exchange shall be 

valued as of the close of the market on the valuation date. Listed stocks not traded on 

such date and all unlisted stocks regularly traded in the over-the-counter market shall be 

valued at the last closing price furnished to the Investment Manager by the National 

47

Association of Securities Dealers, Inc., the National Quotation Bureau Incorporated, or 

any similar organization. Corporate and government bonds shall be valued in such 

manner as determined in good faith by the Investment Manager to reflect their fair market 

values. Such valuation may incorporate models prepared by bond valuing services, last 

sale prices for listed securities, and over-the-counter bid prices. Any other securities 

shall be valued in such manner as determined in good faith by the Investment Manager 

to reflect their fair market values. Should any dispute arise regarding the valuation of a 

security or bond, the Master Custodian shall determine the valuation and its valuation will 

control, but the Investment Manager may advise the Master Custodian if it believes that 

the valuation is incorrectly sourced or used. 

Section 14. 

Authority 

The Board of Trustees shall furnish to the Investment Manager certified copies of 

appointments or designations setting forth the names, titles, and authorities of the 

individuals who are authorized to act on behalf of the Fund with respect to the Sub- 

Account and this Agreement, and the Investment Manager shall be entitled to rely upon 

such information until the Investment Manager receives written notice of a change. 

Section 15. 

Effective Date; Term; Termination 

This Agreement shall become effective on the date signed by the Investment Manager 

and shall continue in full force and effect for one (1) year, and year to year thereafter, 

unless terminated prior to such date in accordance with this Section. This Agreement 

may be terminated by the Board of Trustees effective immediately upon the Investment 

Manager’s receipt of written notice of termination, and by the Investment Manager upon 

sixty (60) days’ advance written notice to the Board of Trustees; provided, however, the 

Board of Trustees through the Fund’s Executive Director or investment consultant, may 

verbally direct the Investment Manager, at any time without prior written notice, to cease 

its management activities with respect to the Sub-Account, which direction shall be 

confirmed, in writing, as soon as practicable. Upon such termination, fees of the 

48

Investment Manager shall be prorated to the date of termination as specified in the notice 

of termination. 

Section 16. 

Delegation of Responsibilities 

The Investment Manager, in its sole discretion, may, upon written disclosure in 

accordance with this Agreement, retain an affiliate of the Investment Manager to provide 

administrative services for the Investment Manager in carrying out its obligations under 

the terms of this Agreement. Any fees payable to such affiliate shall be paid entirely by 

the Investment Manager. Such affiliate shall be bound by the terms of this Agreement. 

Section 17. 

Assignment 

Unless the Board of Trustees expressly consents in writing thereto, the Investment 

Manager’s assignment, as defined in the Investment Advisers Act of 1940, of this 

Agreement shall automatically terminate this Agreement. If the Investment Manager is 

converted into, merges or consolidates with, or sells or transfers substantially all of its 

assets or business to another corporation, the resulting corporation or the corporation to 

which such sale or transfer has been made shall notify the Board of Trustees of such sale 

or transfer and shall become the Investment Manager hereunder only if the Board of 

Trustees expressly so consents in writing. 

Section 18. 

Disclosure of Fees Paid 

A. The Investment Manager shall disclose in writing to the Fund all direct and indirect fees, 

commissions, penalties, and other compensation, including reimbursement for expenses, 

that may be paid by or on behalf of the Investment Manager in connection with the 

Fund’s assets being managed by the Investment Manager. The Investment Manager 

agrees to update such disclosures promptly after a modification of such payments or 

additional payments are made. 

B. The payment of a placement fee or contingency fee is prohibited. The Investment 

Manager acknowledges that Section 1-145 of the Illinois Pension Code prohibits a person 

or entity from retaining a person or entity to attempt to influence the outcome of an 

49

investment decision of or the procurement of investment advice or services of the Fund 

for compensation, contingent in whole or in part upon the decision or procurement. 

Section 19. 

Ethics Statement 

The Investment Manager acknowledges that the Board of Trustees and the Fund are 

subject to the Illinois State Officials and Employees Ethics Act, 5 ILCS 430. The 

Investment Manager further acknowledges that the Fund has adopted an Ethics Policy/ 

Code of Conduct, which is attached hereto and incorporated by reference as Exhibit E. 

The Investment Manager acknowledges that the Fund has adopted a policy requiring an 

investment manager to report to the Executive Director within five (5) days any contact by 

a Trustee to the Investment Manager about brokerage or with whom the Investment 

Manager should place brokerage. 

Section 20. 

Notices 

A. All notices and instructions required by this Agreement shall be deemed duly given when 

delivered to and received by the respective parties as follows: 

To the Board of Trustees: 

Attn: Executive Director, Mr. Kevin B. Huber 


203 North LaSalle Street, Suite 2600, Chicago, IL 60601 

Phone: (312) 604-1338 

Fax: (312) 641-6445 

Huberk@ctpf.org 

To the Investment Manager: 

To the Master Custodian: 

The Northern Trust Company 

Ms. Kathryn M. Stevenson, Senior Vice President 

50 South LaSalle Street 

Chicago, IL 60603 

Phone: (312) 557-0124 

Fax: (312) 557-2710 

Kmo1@ntrs.com 

50

B. Any such notice shall be effective: (a) if sent by certified or registered mail, return receipt 

requested, by United States express mail, or by courier service, then when actually 

received; (b) if sent by telecopier or other facsimile transmission, on the date sent, 

provided confirmatory notice is deposited in the United States mail, postage prepaid, on 

said date; or (c) if delivered by hand, then on the date so delivered. The address or 

addressee to receive notice for any party may be changed by such party from time to 

time by giving notice in the foregoing manner. Any notice required under this Agreement 

may be waived only in writing, signed by the person entitled to notice. 

Section 21. 

Entire Agreement; Amendment 

This Agreement as it may be amended in writing, together with the Exhibits annexed 

hereto, constitutes the entire agreement of the parties; is intended to be the complete and 

exclusive statement of the terms hereof; and, except as provided for herein, may not be 

modified or amended except by a writing signed by the parties hereto. If any provision of 

this Agreement is found to be invalid or unenforceable by a court of competent 

jurisdiction, the other provisions shall be considered severable and enforceable. 

Section 22. 

Governing Law; Venue 

This Agreement shall be governed by, and construed in accordance with, the laws of the 

State of Illinois, without regard to conflict of laws principles. References herein to 

provisions of law shall be deemed to include a reference to any amendments thereof and 

any successor provisions thereto. Venue for any litigation relating to this Agreement, 

including any tort claim arising out of or related to this Agreement, is agreed to be the 

Circuit Court of Cook County, Illinois, or the U.S. District Court for the Northern District of 

Illinois, Eastern Division. 

Section 23. 

Counterparts 

This Agreement may be executed in any number of separate counterparts, each of which 

shall be deemed an original, but the several counterparts shall together constitute but 

one and the same agreement of the parties hereto. 

Section 24. 

Disclosure of Information 

51

The Investment Manager shall regard as confidential all information regarding the 

operations and investments of the Fund and shall not disclose such information except as 

required by law, regulation or in the course of a regulatory examination, or by order of a 

court of competent jurisdiction. Notwithstanding this, the Fund agrees that the 

Investment Manager may from time to time, as it deems necessary in its discretion, 

disclose to third parties that the Fund is one of the Investment Manager’s clients, but the 

Investment Manager agrees that such disclosure shall be limited to supplying the name 

of the Fund only, and not the nature or extent of its investments or any other information 

concerning the Fund. The Fund acknowledges that the Investment Manager considers 

certain information related to its investment databases, investment research, and 

investment processes to be proprietary, confidential and trade secrets. The Investment 

Manager agrees that the Fund is subject to the Illinois Freedom of Information Act 

(“FOIA”). To the extent permitted by FOIA, the Fund agrees to take all reasonable steps 

to assist the Investment Manager in protecting the confidentiality of such information, 

including taking any reasonable and legally permitted steps to preserve the confidentiality 

of such information from disclosure to third parties via FOIA requests. 

Section 25. 

Additional Statutory Provisions 

A. The Investment Manager certifies to the Fund that it is not barred from being awarded a 

contract or subcontract because of a conviction or admission of guilt for bribery or for 

bribing an officer or employee of the State of Illinois or any other state in that officer’s or 

employee’s official capacity as provided in Section 50-5 of the Illinois Procurement Code, 

30 ILCS 500/50-5. 

B. The Investment Manager certifies to the Fund that it is not barred from contracting with 

the Fund because of a violation of Article 33 of the Criminal Code of 1961, 720 ILCS 

5/33. 

C. The Investment Manager certifies that it is neither an entity chartered under the Illinois 

Banking Act, the Savings Bank Act, the Illinois Credit Union Act, or the Illinois Savings 

and Loan Act of 1985 nor a person or entity licensed under the Residential Mortgage 

52

License Act of 1987, the Consumer Installment Loan Act, or the Sales Finance Agency 

Act. 

D. As required by 775 ILCS 5/2-105, to the extent this provision applies to the Investment 

Manager, the Investment Manager agrees to: 

(i) 

Refrain from unlawful discrimination and discrimination based on citizenship 

status in employment and to undertake affirmative action to assure equality of 

employment opportunity and eliminate the effects of past discrimination; 

(ii) 

Comply with the procedures and requirements of the Illinois Department of 

Human Rights’ regulations concerning equal employment opportunities and 

affirmative action; 

(iii) 

Provide such information with respect to its employees and applications for 

employment and assistance as the Illinois Department of Human Rights may 

reasonably request; and 

(iv) 

Have written sexual harassment policies that shall include, at a minimum, the 

following information or its reasonable equivalent: 

the illegality of sexual harassment; 

the definition of sexual harassment under State law; 

a description of sexual harassment, utilizing examples; 

the Investment Manager’s internal complaint process including penalties; 

the legal recourse, investigative and complaint process available through the 

Illinois Department of Human Rights; and directions on how to contact the Illinois 

Department of Human Rights. 

E. The Investment Manager shall maintain, for a minimum of ten (10) years after, all 

transactions involving the Sub-Account, adequate books, records, and supporting 

documents to verify the amounts, recipients, and uses of all disbursements of funds 

passing in conjunction with this Agreement. The Investment Manager shall further make 

all such books, records, and supporting documents related to this Agreement available 

for review and audit as reasonably requested by the internal or external auditors of the 

53

Fund and by the Illinois Auditor General, shall cooperate fully with any audit conducted by 

the internal or external auditors of the Fund and the Illinois Auditor General, and will 

further provide the internal or external auditors of the Fund and the Illinois Auditor 

General full access to all relevant materials. Failure to maintain the books, records, and 

supporting documents required by this Section shall establish a presumption in favor of 

the Board of Trustees for the recovery of any funds for which adequate books, records, 

and supporting documentation are not available to support their purported disbursement. 

Section 26. 

Miscellaneous 

The Investment Manager agrees to notify the Fund’s Executive Director if it solicits or 

intends to solicit for employment any of the employees of the Fund during the term of this 

Agreement. 

IN WITNESS WHEREOF, duly authorized representatives of the Board of Trustees and the Investment 

Manager have executed this Agreement on the day and year signed by the Investment Manager. 

THE BOARD OF TRUSTEES OF THE PUBLIC 

SCHOOL TEACHERS’ PENSION AND 

RETIREMENT FUND OF CHICAGO 

By:___________________________________ 

By:________________________________ 

Title: EXECUTIVE DIRECTOR Title:______________________________ 

54

Exhibit E 

Summary of SB23 Investments in Sudan 

June 27, 2005 – Signed by Governor Blagojevich 

January 27, 2006 – Effective Date 

40 ILCS 5/1-110.5 

A fiduciary of a pension fund shall not invest in, acquire bonds, deposit into, or transfer funds to any 

entity unless the company certifies that: 

1. The company has not invested in, loaned to, or transferred any of the pension fund’s assets to a 

forbidden entity any time after the effective date of this Act (1/27/06); 

2. Within 12 months (before 1/27/07) at least 60% of the pension fund’s assets are not invested in 

forbidden entities; 

3. Within 18 months (before 7/27/07) 100% of the pension fund’s assets are not invested in 

forbidden entities. 

Definition of “forbidden entity”: 

1. The Government of Sudan, any of its agencies or subdivisions; 

2. Any company wholly or partially managed or controlled by the government of Sudan; 

3. Any company established or organized under the laws of Sudan or whose principal place of 

business is Sudan; 

4. Any company identified or sanctioned by the Office of Foreign Assets Control in the US 

Department of the Treasury as sponsoring terrorism or violating any US restriction relating to 

Sudan that occurred after the effective date of this Act; 

5. Any publicly traded company identified by an independent research firm that specializes in global 

security risk as being a company that owns or controls property or assets located in, has 

employees or facilities located in, provides goods or services to, obtain goods or services from, 

has distribution agreements with, issue credits or loans to, purchase bonds or commercial paper 

issued by, or invests in Sudan or any company domiciled in Sudan; 

6. Any non publicly-traded company that fails to submit an affidavit that the company does not own 

or control any property or assets located in Sudan and did not transact business in Sudan. 

Exceptions to Forbidden Entities: 

1. Companies certified as a Non-Government Organization by the United Nation, except agencies of 

Sudan; 

2. Companies who solely engage in the provision of goods and services intended to relieve human 

suffering or to promote welfare, health, religious and spiritual activities, and education for 

humanitarian purposes; 

3. Companies who solely engage in journalistic activities. 

Penalties: 

1. In addition to any other penalties under the law of Illinois and the United States, any transaction 

that violates the provisions of this Act shall be void or voidable, at the sole discretion of the 

fiduciary. 

55

Summary of SB23 Investments in Sudan 

- continued 

Interpretation: 

- Beginning January 27, 2006, Trustees, acting as fiduciaries, cannot invest with a new or 

current manager unless the manager certifies they do not have any assets or investments 

in forbidden entities. 

- Beginning January 27, 2006, Investment Managers, acting as fiduciaries, cannot invest 

with a company unless the company certifies they do not have any assets or investments 

in forbidden entities. 

- Before January 27, 2007 the Pension Fund must have certification from our managers 

that at least 60% of our portfolio is not invested in forbidden entities. 

- Before July 27, 2007 the Pension Fund must have certification from our managers that 

100% of our portfolio is not invested in forbidden entities. 

- Forbidden Entity #5 may include most multi-national companies including financial 

institutions, oil and gas companies and consumer goods companies. Examples include: 

- Coca Cola if they sell coke to consumers in Sudan; 

- GM if they sell cars to consumers in Sudan; 

- Shell if they have a gas station in Sudan; 

- Citigroup if they provide loans to consumers in Sudan. 

- Forbidden Entity #6 means that the Pension Fund will not be allowed to invest in new or 

current Real Estate or Private Equity partnerships unless we receive an affidavit from the 

partnership that they do not have any assets or investments, or hold any company that has 

underlying assets or investments in Sudan. 

56

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