City of Baltimore Employees & Elected Officials Retirement Systems & the City OPEB Trust

Transcription

1 City of Baltimore Employees & Elected Officials Retirement Systems & the City OPEB Trust Request for Information to Provide Master Custody Services Table of Contents Topic Section(s) Part I: The Search Process Section I: Overview Scope of Services Minimum Qualifications Schedule for RFI Process Section II: Structure of Proposal and Submission of Procedures Format (Cover Letter, Submission & Timetable, Respondent Independence) Evaluation of Responses Characteristics to be Evaluated A B C D A-B C D E Part II: Technical Elements Organization Administration Accounting & Reporting (Exhibit I) Cash Management and Asset Servicing Corporate Actions, Proxy Voting & Class Action Securities Lending Benefit Payment Operational Capabilities Transition Process (Exhibit II) A B C D E F G H Part III: Fees (Exhibit III) Attachment A: Background Information Attachment B: List of Managers as of September 30, 2012 Appendix Representations and Warranties 1

2 Request for Information to provide Master Custody Services to the City of Baltimore Employees & Elected Officials Retirement Systems & the City OPEB Trust PART I: THE SEARCH PROCESS I. Overview A. On behalf of the Board of Trustees of the City of Baltimore Employees & Elected Officials Retirement Systems (Systems), we are soliciting a request for information (RFI) for a firm to provide Master Custody Services for the following City of Baltimore entities: The Employees Retirement System, (ERS) The Elected Officials Retirement System, (EOS) and the City of Baltimore Other Post-Employment Benefit Trust, (OPEB). For the purpose of this RFI, we will refer to the three entities as the Systems. Combined assets for the Systems are around $1.5 billion with about 65% to be custodied and the remaining 35% in commingled funds, real estate or allocated to alternatives investments. The term of the contract will be five years starting in 2013 with an option for additional years of renewal. The successful firm will also be responsible for coordinating and managing the transition process (if a new custodian is selected) at their own cost. Further, note that if for any reason the Systems determine this solicitation should be cancelled or extended, any and all liabilities incurred by potential bidders will not be considered the liability of the ERS/EOS, and the solicitation will cease. B. Scope of Services The primary goal of the Systems is to establish a master custody relationship that will provide, but is not limited to: Safekeeping of U.S. and Non-U.S. Assets (maintain Book of Record) Integration of entire Investment program Trade Settlement and Processing Accounting and Reporting (according to generally accepted accounting principles in the US) Accounting and requisite GASB Reports Monthly and Annual Valuations Income Collection and Processing Cash Management / Cash Sweeps Securities Lending Services Accurate and Timely Securities Pricing Web-Base / Client Access to Custodian a plus Class Action Litigation Support and necessary filing Corporate Action Support Services & Proxy Voting Services Foreign Exchange Services Performance Evaluations/Risk Management (may not be required, but interested for review) Benefit Payments and Recordkeeping 2

3 Of particular concern to the Systems are cost-effective solutions that embrace technology, expert systems, and have a disciplined approach in the delivery of trust/custody services. Lastly, the System would like to have a knowledgeable, seasoned and a responsive client servicing team assigned to their account. This and fees are very important. C. Minimum Qualifications Respondents must meet the following minimum qualifications: At least $1 trillion in total market capitalization and same in total tax-exempt assets under trust/custody as of December 31, Minimum of 30 years experience in directly providing master trust/custody services for large institutional tax-exempt investors. Minimum of 20 years experience in providing securities lending on an agency basis, benefits payment and records keeping services. At least $200 billion in securities lending lendable base for each of the last 15 years ending December 31, Will accept responsibility for securities lending program as a fully indemnified agent program specific to borrower default and operational negligence. D. Schedule for Request for Information, (RFI) Process: Notice of the search to the public by Consultant and placed on November 5, 2012 the ERS website. Respondents providing Notice of Intent to respond and submitting questions with respect to the RFI. November 15, 2012, 3:00 P.M. CST ERS staff s submission of answers to respondent s questions. November 22, 2012 Deadline for Submission of Completed RFI Friday, December 21, 2012, 3:00 P.M. CST Consultant s evaluation and list of finalists to the Board for discussion and selection for interview January 18, 2013 Oral presentation by the finalists to the Board of Trustees and selection of custodian. February 21, 2013 Contract negotiation and Board of Estimates approval February March 2013 Actual conversion (if needed) July 1, 2013 PLEASE NOTE: ANY RFI RECEIVED AFTER THE FRIDAY, DECEMBER 21, 2012 DUE DATE AND TIME WILL NOT BE CONSIDERED. 3

4 I. Structure of Proposal and Submission Procedures A. The Board has solicited the assistance of Marquette Associates to evaluate and retain the best provider of Master Custody Services in a fair, transparent and competitive process. After evaluation of the responses received, the ERS Board of Trustees reserves the sole discretion in selecting and awarding a contract. Please note and provide all information and materials requested in the order that they are presented in this RFI. Also, expenses associated with the preparation and submission of this RFI is the sole responsibility of the respondent. B. Nichole Roman-Bhatty of Marquette Associates will be responsible for coordinating and analyzing the RFI process. Therefore, all questions and requests should be directed to: nrb@marquetteassociates.com. Respondents may submit questions via tomarquette Associates within the specified timeframe. Marquette will document all questions and refer them to the ERS for response. The responds to questions will be to all of the respondents, posted on the ERS website as well as held at Marquette Offices. C. Format: 1. Cover Letter Nichole Roman-Bhatty, Managing Associate Marquette Associates, Inc. 180 N. LaSalle Street, Suite 3500 Chicago, Illinois Tel: (312) Fax: (312) The individual(s) who is (are) authorized to bind the respondent contractually must sign a cover letter, which will be considered an integral part of the proposal. An unsigned cover letter will cause the proposal to be rejected. The cover letter must contain a statement that the firm acknowledges that all documents submitted pursuant to this request for proposal process will become a matter of public record. The letter must also contain the following information / attachments: The Letter must be addressed to Roselyn H. Spencer, Executive Director as listed below. The respondent s name, address, address, and telephone and facsimile numbers. The respondent s Federal Employer Identification Number and Corporate Identification Number, if applicable. The name, title or position, and telephone number of the individual signing the cover letter and a statement indicating that person is authorized to bind the company to the proposal. A statement to the effect that the proposal is a firm and irrevocable offer. A statement expressing the respondent s willingness to perform all the mandated services as described in this RFI. 4

5 A statement expressing the respondent s availability of staff and other required resources for performing all services and providing all deliverables within specified time frames. A statement that the valuation will be conducted in accordance with generally accepted master custody procedures. The letter should also state that the RFI is valid for six months from date of submission. The Certificate of Independence must be returned with the response to the master custody questionnaire. 2. Proposal Submission & Timetable The deadline for submission of the firm s proposal is Friday, December 21, 2012 at 3:00 p.m. (EDT) Please submit three (3) hard copies and two (2) digital copies on CD/DVD of the proposal to: Nichole Roman-Bhatty, Managing Partner Marquette Associates, Inc. 180 N. LaSalle Street, Suite 3500 Chicago, Illinois Please submit two (2) hard copies and two (2) digital copies on CD/DVD of the proposal to: Roselyn H. Spencer, Executive Director Employees & Elected Officials Retirement Systems 7 East Redwood Street 12 th floor Baltimore, Maryland Any proposals received after that date and time will be rejected. The ERS and Marquette Associates do not accept any responsibility for receipt of any proposal that is improperly labeled, lost or delivered late. Faxed responses will not be accepted and will not receive consideration. Amendments or reconstituted responses must be received by Marquette Associates and the ERS in accordance with the above-stipulated constraints. 3. Respondent Independence Contact with Board Members prohibited: During the ERS/EOS Board s search for a firm to provide global custody services, a candidate provider of such services shall not have any contact with members of the Board of Trustees concerning this request for proposal and contract. Certificate of Independence: Finalist candidates to this RFI will receive and be required to file with the Executive Director a Certificate of Independence indicating whether or not the firm or any individuals with the firm have a possible conflict of interest or any relationship with the Board members, Executive Director or Deputy Executive Director. 5

6 D. Evaluation of Responses 1. Structure: This RFI is structured in three sections: (1) Organizational, (2) Service /technology and (3) Fees. Fees are very important and must be clearly stated. The fee proposal should be comprised of (1) a fixed fee and an unbundled fee, including services stipulated above for five years. Answers to the questions must be in the same order as found in the RFI services questionnaire that follows. All pages must be numbered. The responses should contain a cover letter outlining the required information and the responses should include all requisite attachments. 2. Preliminary Review: Proposals will be evaluated based upon the quality, clarity, and succinctness of the responses. All timely submitted proposals will be reviewed to determine which meet the minimum qualifications and proposal requirements. The Board reserves the right to modify any part of this RFI prior to the final date for submission to all participants. The Board also reserves the right to request additional information from the finalist. 3. Selection of Finalists and Oral Presentation: Marquette Associates will evaluate the responses and present a list of the semi-finalists to the Board of Trustees. The Board will select the finalists for subsequent presentation of their proposals. The Board will select the custodian. 4. Contract: The selected custodian must complete a contract and the Baltimore City Board of Estimates must approve the contract before commencement of master custody services. E. Characteristics to be Evaluated are: Organization / Administration o Organization commitment & comprehensive book of services o Financial Stability of the organization o Personnel; stability of senior management, Relationship team; client Service Officer, portfolio manager interface o Client references and retention Service: Accounting & Reporting o Custody, trade processing and reporting capabilities o Global-sub custodian services/ markets o Technology & Systems o Cash management and sweep vehicles o Handling of ancillary services - corporate actions, class actions, & litigations o Securities Lending & Foreign Exchange o Benefit disbursement Fees and pass through cost/expenses 6

7 Part II: TECHNICAL ELEMENTS Section A: ORGANIZATION 1. Briefly describe the organization structure of the Bank and master custody department. Provide an organizational chart showing the operation s interrelationships and authority within the master custodian service unit and within the organization. Please comment on your organization s financial strength and provide your most recent S&P and Moody s ratings and reports. 2. Briefly describe your master trust service capabilities including those items which currently set you apart from your competition. 3. Has there been any litigation or investigation by a regulatory authority, federal, state and local government and any contingent liabilities in your company, its offices or its principles have been involved in within the past 5 years? If yes, please attach details. 4. Describe the types of insurance and bonding you presently possess, including for each the name of the insurer, the type of the insurance policy and bond, the policy limits, and the deductible. 5. Please provide breakdown of your firm s institutional clients: Type of Client Total Assets Number of Accounts Average Client Size Public Taft-Hartley Corporate Other Total 6. Please provide the information requested in the Matrix on your ten largest tax-exempt Master Trust and custody clients (in order of asset size) as of December 31, Name Total Asset Value ($ millions) Plan Type & Total # of Plans 7. Please list individual account growth for the periods below: # of Accounts Lost Asset Value ($000) # of Accounts Gained Asset Value ($000) (a) Please provide (names and contact information of) three (3) client references with similar 7

8 (b) configuration and service requirements as that of the Systems. Please provide names and contact information of two (2) clients lost over the past 5 years and reason for their departure. 9. Please provide a representative client list. B. ADMINISTRATION 1. Please describe the management structure for master custody and how it fits within the overall organization. Please provide an organizational chart. 2. Please provide the following information regarding contact officers and account administrators turnover: # of Professionals Hired # of Professionals Retired # of Professionals Terminated Please provide the name, title, address, phone number, and fax number for the key individuals that would serve as relationship contact(s) for our account. Please provide brief bios for each individual. 4. How many accounts does you typical account representative manage? How do you determine the number of accounts assigned to each relationship team? 5. Given recent regulatory and other Independent Professional Organization (GASB) changes to handling and reporting on Pension Plan assets, what steps have you taken to ensure that master custody services are provided in accordance with proper standard of care, regulatory requirements, governing Boards requirement and the executed agreement with the City? C. ACCOUNTING & REPORTING 1. Provide a brief description of your accounting process and systems for ensuring that all trades and transactions are received and properly recorded. 2. Please describe your global sub-custodian services. List number of markets and how trades are monitored and integrated with assets in the US to provide clients with a comprehensive report. 3. Describe the controls in place for ensuring wire transfers are made in a timely and accurate manner. 4. When do you post interest, dividends and sales proceeds? When do you debit purchases? Are income payments credited in same day funds? 5. How do you handle options/futures and short sell accounting? Please describe briefly the extent of your capabilities. 6. Describe your pricing source for each kind of instrument you custody. State the sources and 8

9 frequencies. How do you ensure the accuracy of these prices? How often are they updated? Is this functionality available to clients on-line? How do you price securities that are not available from your pricing sources, such as private placements and hedge funds? 7. What procedures do you have in effect, if any, to flag and investigate unusual or significant pricing vacancies from the previous day/month? 8. What reports are provided as part of your standard package? What reports are available on-line? Can clients retrieve on-line information in a customized format? If so, describe your custom reporting flexibility and limitations. Is the data compatible with Excel or other PC-based software? 9. How soon after accounting periods are reports available? Please provide time periods for both audited and un-audited reports, and on-line and hard-copy reports. 10. Is the reporting system trade-date, settlement-date, or cash basis? Do asset valuation and transaction statements reflect pending transactions? Are accrued interest and transactions included in asset valuations? 11. Do you have the capacity to report brokerage commissions by account and by transaction? Please describe your process and available statements. 12. Please provide sample copies of your accounting reports and a copy of your most recent SAS 70 Report, as Exhibit I. D. CASH MANAGEMENT AND ASSET SERVICING 1. Describe your system for monitoring and projecting cash balances. Do you sweep cash automatically for domestic and international cash balances? If so, how often and to what balance? 2. Are clients charged for overdrafts? What is the bank s policy and procedure? 3. What types of short-term investment vehicles are available for qualified and non-qualified plan balances? Please describe each vehicle in detail, including investment philosophy, types of allowable investments, investment performance, minimum purchase units, and whether the investments are Federally insured. 4. How do you monitor investment manager services? 5. Explain your procedure for notifying investment managers of failed trades and insufficient balances. E. CORPORATE ACTIONS, PROXY VOTING AND CLASS ACTION 9

10 1. Do you have a dedicated unit for corporate actions, proxy and class action? Please describe. 2. Briefly describe your corporate action procedures for domestic and foreign securities, including providing proxies the System, monitoring, etc. Include a list of the various sources the custodian uses for corporate action announcements. 3. If you or your sub-custodian or its depository makes a mistake on a corporate action for which it received information and proper instructions that results in a loss to a client, describe your procedures for reimbursing the client. 4. How does the custodian handle class action suits (e.g., NASDAQ Class Action)? Is class action monitoring and filing of claims performed in-house or subcontracted? Please describe your process for filing claims, collection and posting of awards. 5. For foreign securities, describe the custodian s procedures for notification and processing of blocked shares during proxy voting periods. Do you offer segregated accounts to facilitate proxy voting in any markets? Please explain. 6. Do you have a client accessible system of monitoring class action litigation and bankruptcy proceedings affecting the portfolio of securities of the System? Please describe. 7. Is your system able to advise clients and the client s investment managers of significant dates and deadlines in respect to such proceedings including but not limited to opt-out of elections in class actions litigation, deadlines for filing claims and deadlines for filing bankruptcy notices or claims? Please explain. F. SECURITIES LENDING 1. Provide an overview of your securities lending operation for U.S. and non U.S. programs. Please list countries that you lend in. 2. How many clients currently participate in your securities lending program? Do you lend as agent or principal? 3. How many borrowing relationships does your organization have? How are these borrowers selected? Who are your primary borrowers? Please describe your ongoing borrower monitoring process? How often is creditworthiness reviewed? 4. Can the client select or eliminate a given borrower for their account? Can a client establish a limit for loans to a given borrower? Has any borrower ever defaulted? Please describe. 5. Does your organization have its own securities lending desk? If yes, is your securities lending group in-house and how many years of experience does your organization have? If no, please describe. 6. What was the average percentage of client securities on loan in 2008, 2009, 2010, and 2011? 7. Describe your collateralization policy. What forms of collateral are accepted? What percentage collateralization do you require for the different security types? Describe how your requirements 10

11 compare to regulatory, industry, and other standards (i.e., stricter, looser). 8. How is collateral invested? Do you have different risk-level investment options? 9. Explain your security loan allocation system and the basis on which you make such allocations to all clients. How do you assure your clients an equal opportunity to participate in your securities lending program? 10. Do you indemnify the client against collateral investment losses? Against broker default? Against all losses from participation in your securities lending program? Describe any loss experience to date. 11. (a) Given our holdings in the ERS and OPEB Trust fund, please provide an estimated earnings projection. (b) What is the fee structure/split between the bank and the owner of securities? Please provide in Exhibit II under Fees. 12. What was the average spread on lending securities in all asset classes for 2008, 2009, 2010, and 2011? 13. What is your reporting procedure for lending transactions? How often do you report and what is included? 14. What is your process for working with third party lenders? Are the additional fees (transactions) to the clients? Do you perceive additional risk? Please discuss. 15. Please discuss your process for handling foreign exchange transactions. Please provide associated transaction fees if FX is done with your firm and if done with a third party. G. BENEFIT PAYMENT OPERATIONAL CAPABILITIES 1. Please describe your benefit payment services and processing capabilities. State if provided in-house or through a third party vendor. 2. What is the distinct competitive advantage of your benefit payment services and retiree services? 3. Regarding benefit payment services, detail a typical processing cycle including timing requirements for additions, deletions and other changes to a file. 4. Can you do off-cycle payments? If yes, please provide a discussion of your process and how such occurrence fits in your reconciliation process. 5. Please provide a complete description of how outstanding check issues are handled, namely soliciting retirees, aging process, and death searches. How are refunds due to overpayments collected? 6. How do you partner with your customers to provide Plan Participants in pay status with communications? 7. Systems: 11

12 (a) (b) (c) (d) (e) (f) What hardware is used to process plan data? Is the System web-based? What type of interface is required from the plan sponsor to access your system for inquiry? Where is your computer hardware located? Describe your maintenance and back-up procedures, number of daily backups and Retention Schedule. Describe your document disaster recovery plan. Do you have a secondary processing site? How often is the software updated? Provide information about any pending system modifications and include release dates. Describe any recent experience in recovering from primary system failure. Can the System run ad-hoc reports via the Internet or other on-line applications? Please explain and list the reports. 8. Payment Processing: (Please provide concise answers. A number or Yes/No) (a) Approximately how many benefit payment checks do you process on a monthly basis? # (b) How many earnings and deduction codes can the system handle? # (c) Can the system handle multiple payment types on one check to the retiree? Yes No (d) Can the System track checks (cleared or outstanding) via the Internet or other on-line applications? Yes No (e) Can you accommodate multiple payment cycles: i.e. some checks issued at the beginning of the month and some checks issued the end of the month? Yes No (f) Is a direct deposit service routinely provided to payees? Yes No (g) When are payment advices mailed? (h) Are you able to print messages with retiree checks? Any limitations on the text? Yes No (i) Is the benefits group able to include additional mailings and flyers? Yes No (j) Can you wire lump sum payments to rollover institutions? Yes No (k) Can your organization manage direct deposit via electronic funds transfer (EFT)? Yes No (l) Please indicate how you report stop payments and re-issues with regard to reconciliation of tax reporting, especially when a tax year has passed. (m) Are state taxes, insurance premiums, etc. routinely withheld? Yes No (n) Can you generate 1099R Statements? Yes No (o) Describe the policies and procedures for Timely Notification of Returned Payments. (p) Do you offer a toll-free number retirees may call for services? Yes No 9. Reporting: (a) What types of benefit payment reports/reconciliations are available to clients? Provide report samples. (b) Are customized reports available upon request? Yes No (c) Since we will require detailed reporting, does the benefit payment system allow tracking of pension payments, by type of payment (monthly pension, death, lump sun, $5,000 or less, mandatory cash-outs, etc.) by subsidiary, by type of employee (i.e., executive, represented, non-represented)? Further, would the reporting separately track restorations, tax refunds, taxes withheld and actual benefits? (d) Please describe in full your tax reporting capabilities, including disability payments. (e) Can mailing labels be provided upon request? Yes No 12

13 H. TRANSITION PROCESS 1. Please describe the conversion process (who is responsible for coordinating activities, who participated, what activities must occur, etc.). Include an estimated conversion calendar, including actions required on the part of the client and the time frame to complete each task. Please include the total number of conversions the lead team member has coordinated and how many years with the firm. List as Exhibit II. 2. How do you ensure sufficient control during the transition period to assure that the process is successfully completed in both an accurate and timely manner? 3. If a transaction is necessary, are you willing to absorb transition costs for domestic and international securities? If not, are there any additional costs associated with the conversion? If so, please specify. Part III -- FEES (Exhibit III ) 1. Please provide a flat fee schedule covering all services except for pass through expenses. 2. Please provide a detailed fee schedule for the associated relationship. 3. What is the management fees associated with each short-term investment vehicle? 4. Please list all other ancillary or out-of-pocket expenses passed through to the client. 5. Do you offer a multi-year guarantee at current fee schedules? 13

14 Attachment A: Background Information The City of Baltimore Employees Retirement System (ERS) is a defined benefit public pension retirement system established by City Ordinance in 1926 to provide service retirement benefits as well as death and disability benefits to a population of mainly non-contributory members and their beneficiaries. The plan covers eligible members employed in the general administration service of the City and certain non-teacher employees of the Baltimore City Public School System. The ERS does not cover Public Safety Employees who are covered in a separate defined benefit plan. As of June 30, 2011, the ERS membership consisted of the following: Retirees and beneficiaries receiving benefits 8,693 Terminated members not yet receiving benefits 1,097 Active plan members _9,393 Total membership 19,183 Employees become eligible for membership after one year of full time employment Members vest after 10 years of membership service Retirement benefits eligibility is based on age, years of service, and a multiplier. The plan also provides for disability and survivorship benefits. A seven member Board that has fiduciary responsibility governs the ERS and EOS. This fiduciary authority is established by statute under the Baltimore City Code. The Retirement Systems function as component units of the City of Baltimore. As of June 30, 2011, the ERS plan had net assets available for plan benefits of $1.2 billion. The plan pays out approximately $116 million annually in retirement benefits. As of September 30, 2012, the strategic asset allocation for the ERS is: Domestic Equity (38.6%), International Equity (12.6%), Domestic Fixed Income (25.4%), Real Estate (9.7%), Hedge Funds (4.7%), Private Equity (4.5%), Cash Equivalents (4.6%). The City of Baltimore Elected Officials Retirement System (EOS) The EOS was established in 1983 by City Ordinance. It is a defined benefit plan covering those Elected Officials who are not members of the Employees Retirement System. The EOS is a contributory system that provides service retirements as well as death and disability benefits to its members and beneficiaries. As of June 30, 2011, the EOS had 22 Retired and Beneficiary recipients, 17 Active Members and 1 Terminated Vested Member. Retirement benefits are generally structured in terms of age and years of service. As of June 30, 2011, the plan had net assets available for plan benefits of $17.8 million. The plan pays out approximately $817,000 annually in benefits. 100% of the EOS assets are invested in commingled funds. As of September 30, 2012, the strategic asset allocation for the EOS is: Domestic Equity (45.1%), International Equity (20.8%), Domestic Fixed Income (45.1%), Cash Equivalents (1.6%). To assist in your response, copies of the most recent Comprehensive Annual Financial Reports (CAFRs) for June 30, 2011 for the two Retirement Systems are available online at: 14

15 The City of Baltimore Other Post- Employment Benefit Trust (OPEB Trust) The City OPEB Trust was established in 2007 in response to GASB 45 requirements to set aside funds to pay for current and future health care benefits of all active and retired City employees. In June 2008 under City Charter provisions, the Finance Director as Trustee and sole fiduciary of the OPEB Trust delegated the investment and disbursements duties as Trustee of the OPEB Trust to the ERS Board. Additional information if required will be provided during the Q & A process. OPEB funds are not qualifying funds under ERISA. It is City/Local Government funds, but must be handled separately from other qualifying trust funds for cash management purposes. As of September 30, 2012, the strategic asset allocation for the OPEB Trust is: Domestic Equity (28.7%), International Equity (18.4%), Domestic Fixed Income (36.9%), Hedge Funds (12.7%), Cash Equivalents (4.1%). Attachment B: List of Managers as of September 30,

16 APPENDIX REPRESENTATIONS AND WARRANTIES All firms are required to submit this executed copy as an attachment to the cover letter of the RFI. A. The firm warrants that it maintains an errors and omissions insurance policy providing not less than $5 million of coverage for negligent acts or omissions, a copy of which will be submitted to the Mayor and City Council of Baltimore (City) upon selection, and that such coverage will be applicable to the firm s actions, responsibilities and obligations under a Consulting Agreement. B. The firm warrants that it will accept $ as full compensation for the services more fully described in its response to the RFI and provided to the Mayor and City Council of Baltimore under a Consulting Agreement. Except as to certain expenses provided enumerated in the Consulting Agreement, the firm shall not be entitled to the payments of any additional monies for reimbursement of expenses or for provision of any services (including attendance at meetings and hearings). C. The firm warrants that it has completed, obtained, and performed all registrations, filings, approvals, authorizations, consents or examinations require by any government, governmental authority, or other regulatory authority with respect to all services, actions, responsibilities, and obligations contemplated to be rendered by the firm under an Investment Advisory Agreement. D. The firm warrants that it meets all of the minimum criteria applicable to the firm under this RFI. E. The firm warrants that the person submitting this Proposal and executing these Representations and Warranties is duly authorized by the firm to submit this Proposal and execute these Representations and Warranties. Name of Firm Signature Date Title City of, State of Subscribed and sworn to before me this day of (SEAL) Notary Public My commission expires: 16

17 ATTACHMENT B Preliminary, subject to revision Baltimore Employees' Retirement System Baltimore Employees' Retirement System Flash Report September 30, 2012

18 Total Fund Composite Market Values Market Value: $1,327.1 Million and 100.0% of Fund Asset Class Market Value Ending September 30, Mo Net Cash Flows % of Portfolio Policy % Policy Difference Total Fund Composite $1,327,138,929 -$10,890, % 100.0% $0 Total Fixed Income Composite $337,277,975 -$35, % 26.0% -$7,778,133 Mellon EB Aggregate Bond Index Fund Core Fixed Income $163,617,369 -$2, % Utendahl Core Plus Fixed Income $82,689,061 -$5, % PIMCO Core Plus Fixed Income $90,645,132 -$26, % Western Asset Management Int. Fixed Income $326,413 -$68 0.0% Total Domestic Equity Composite $511,820,307 $209, % 36.0% $34,050,279 Edgar Lomax Large-Cap Value $65,493,373 -$11, % Mellon EB Large Cap SIF Large-Cap Core $218,993,112 -$3, % TimesSquare Mid-Cap Growth $79,437,254 -$61, % Rothschild Small-Cap Value $80,618,780 -$40, % FIS Funds Management $67,277,788 $326, % 0.0% $67,277,788 Herndon Large-Cap Value $9,608,347 $1,201, % Lombardia Large-Cap Value $5,962,909 $0 0.4% Oakbrook Large-Cap Value $7,313,151 -$1 0.6% Martin Investment Large-Cap Core $9,508,327 $2,104, % Profit Inv. Large-Cap Core $8,033,649 $1,215, % Oakbrook Large-Cap Growth $6,729,834 $806, % Ithaka Group Large-Cap Growth $4,688,546 $4,801, % Vision Capital Large-Cap Growth $4,692,469 $4,809, % McClain Value All-Cap Value $4,702,799 $4,765, % Opus Small-Cap Value $2,958,616 $660, % Nicholas Investment Small-Cap Growth $3,077,414 $1,493, % Denali Advisors Large-Cap Value $1,270 -$4,446, % Herndon Large-Cap Core $456 -$8,176, % Mastrapasqua Large-Cap Growth $1 -$7,699, % Total International Equity Composite $166,681,903 -$93, % 14.0% -$19,117,547 Philadelphia International Thornburg Mondrian Non-U.S. Large-Cap Value Non-U.S. Large-Cap Core Non-U.S. Small-Cap Value $47,729,144 -$17, % $49,353,871 -$28, % $69,598,888 -$46, % Total Hedge Fund Composite $62,110,698 -$31, % 5.0% -$4,246,248 Grosvenor Multi-Strat. Hedge FoF $31,391,358 -$31, % Corbin Pinehurst Multi-Strat. Hedge FoF $30,719,340 $0 2.3% Total Real Estate Composite $128,330,910 -$30, % 9.0% $8,888,406 American Realty Core Real Estate $71,269,097 $0 5.4% Hancock ForesTree VI Diversified Timber $13,566,432 -$112, % Marquette Associates, Inc. 1

19 Total Fund Composite Asset Class Market Value Ending September 30, Mo Net Cash Flows Market Values Market Value: $1,327.1 Million and 100.0% of Fund % of Portfolio _ CBRE Global Investors Global REIT $45,863 -$25 0.0% Apollo VEF VI, L.P. Thor Equities Value-Added Real Estate Value-Added Real Estate $12,005,114 $0 0.9% $1,444,404 $81, % Cornerstone Real Estate Advisors Core Real Estate $30,000,000 $0 2.3% Policy % Policy Difference Private Equity Composite $59,464,040 $1,260, % 10.0% -$73,249,853 Abbott PE Fund III U.S. Private Equity FoF $8,832,012 -$400, % Abbott PE Fund V U.S. Private Equity FoF $21,843,581 -$150, % Abbott PE Fund VI U.S. Private Equity FoF $10,476,409 $0 0.8% Fairview Capital III U.S. Private Equity FoF $4,766,695 $0 0.4% Fairview Venture III U.S. Private Equity FoF $4,074,963 $0 0.3% Maryland Venture Capital Venture Private Equity $5,950 $0 0.0% RCP Fund VII Feeder LBO Private Equity FoF $2,877,818 $0 0.2% RCP Fund VII Direct LBO Private Equity $1,982,436 $0 0.1% Summit Partners Sub. Debt Fund Mezz. Private Equity $3,740,641 $1,500, % Adams Street 2012 Global Fund Global Divers. Private Equity FoF $863,535 $310, % Cash Equivalents Composite $61,453,096 -$12,169, % 0.0% $61,453,096 Transition Account Cash & Equivalents $94,207 -$326, % BNY Mellon Cash Reserve Cash & Equivalents $61,358,889 -$11,842, % XXXXX *Please note the following: The Herndon LCG, Denali and Mastrapasqua accounts were terminated during September, and only cash remains in the accounts. American Realty: market value as of June 30, 2012, adjusted for capital calls/distributions. Thor Equities: market value as of June 30, 2012, adjusted for capital calls/distributions. CBRE Global Investors: manager terminated. Only cash remains in the account. Apollo Real Estate Advisors: market value as of June 30, 2012, adjusted for capital calls/distributions. Hancock Timber Resource Group: market value as of June 30, 2012, adjusted for capital calls/distributions. Abbot Capital Fund III, V and VI: market value as of June 30, 2012, adjusted for capital calls/distributions. Fairview Capital Fund III: market value as of June 30, 2012, adjusted for capital calls/distributions. Fairview Ventures Fund III: market value as of June 30, 2012, adjusted for capital calls/distributions. Maryland Venture Capital consists of cash. RCP Fund VII Feeder and RCP Fund VII Directed: market value as of June 30, 2012, adjusted for capital calls/distributions. Summit Partners: market value as of June 30, 2012, adjusted for capital calls/distributions. Adams Street 2012 Global Fund: market value as of June 30, 2012, adjusted for capital calls/distributions. 2 Marquette Associates, Inc.

20 Preliminary, subject to revision. Baltimore Elected Officials' Retirement Baltimore Retirement Elected Officials' Retirement Flash Report September 30, 2012

21 Total Fund Composite Market Values Market Value: $19.4 Million and 100.0% of Fund Asset Class Market Value Ending September 30, Mo Net Cash Flows % of Portfolio Policy % Policy Difference _ Total Fund Composite $19,432,846 -$64, % 100.0% $0 Fixed Income Composite Mellon Aggregate Bond Index Fund $6,338,563 -$ % 35.0% -$462,933 Core Fixed Income $6,338,563 -$ % U.S. Equity Composite $8,755,916 -$ % 44.0% $205,464 Mellon Large Cap Stock Index Fund Mellon Mid Cap Stock Index Fund Large-Cap Core $5,209,222 -$ % Mid-Cap Core $1,771,390 -$30 9.1% Mellon Small Cap Stock Index Fund Small-Cap Core $1,775,305 -$30 9.1% International Equity Composite Mellon ACWI ex. USA Index Fund $4,034,543 -$1, % 21.0% -$46,355 Non-U.S. Large-Cap Core $1,936,963 -$ % Mondrian Cash Equivalents Composite Non-U.S. Small-Cap Value $2,097,580 -$1, % $303,824 -$62, % 0.0% $303,824 Cash Cash & Equivalents $303,824 -$62, % XXXXX Marquette Associates, Inc. 1

22 Preliminary, subject to revision City of Baltimore OPEB Trust City of Baltimore Retiree Benefits Trust Flash Report September 30, 2012

23 Total Fund Composite Market Values Asset Class Market Value Ending September 30, Mo Net Cash Flows % of Portfolio Policy % Policy Difference _ Total Fund Composite $267,420,626 -$3,054, % 100.0% $0 Fixed Income Composite $98,699,223 -$37, % 35.0% $5,102,007 CF MCM Aggregate Bond Fund Core Fixed Income $82,084,500 -$1, % Vanguard Total Bond Market ETF Core Fixed Income $16,614,723 -$35, % U.S. Equity Composite $74,351,008 -$25, % 30.0% -$5,875,183 MCM Large Cap Stock Index Fund Large-Cap Core $28,080,485 -$ % Brown Capital Management Mid-Cap Growth $23,349,906 -$10, % GW Capital Small-Cap Value $22,920,617 -$14, % International Equity Composite $49,285,423 -$16, % 20.0% -$4,198,703 MCM All Country World Index Ex-US Fund Mondrian Non-U.S. Large-Cap Core Non-U.S. Small-Cap Value $26,007,855 -$ % $23,277,568 -$16, % Hedge Fund of Funds Composite $34,037,050 $0 12.7% 15.0% -$6,076,047 Rock Creek Georgetown Fund Common Sense Long-Biased Fund Hedged Equity Hedge FoF Hedged Equity Hedge FoF $17,455,979 $0 6.5% $16,581,071 $0 6.2% Cash Equivalents Composite $11,047,923 -$2,975, % 0.0% $11,047,923 Money Market Fund Cash & Equivalents $2,503,323 -$3,010, % Standish Mellon Cash & Equivalents $8,544,599 $35, % Market Value: $267.4 Million and 100.0% of Fund *Rock Creek Georgetown Fund market value is carried over as of August 31, Marquette Associates, Inc. 1