The Fund is governed by Illinois Compiled Statutes, which can be viewed at:

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1 REQUEST FOR PROPOSAL POLICEMEN S ANNUITY AND BENEFIT FUND OF CHICAGO, ILLINOIS Income Generating Investment Management Services The Retirement Board ( the Board ) of the Policemen s Annuity and Benefit Fund of Chicago ( the Fund or PABF ) is requesting proposals from qualified firms interested in providing Income Generating Investment Management Services ( Proposers ). The dollar size of the mandate will vary from time to time, but is likely to be in the range of approximately $10 million to $40 million. All forms/required documents needed for submitting a Request for Proposal ( RFP ) are available on the Chicago PABF website at Information regarding the RFP may not be available in any other form or location. Bidders are responsible for monitoring the website. Bidders are also responsible for reviewing and completing the required documents under the Investment/Search/Documents portion of the website. The Fund is a pension trust fund of the City of Chicago established in The Board is made up of eight members. Decisions in regards to awarding mandates shall be at the sole discretion of the Board in exercising their investment authority to ensure the prudent investment of Fund assets. To learn more about the Fund you may visit our website at: The Fund is governed by Illinois Compiled Statutes, which can be viewed at: SUBMISSION OF PROPOSALS The Board s investment consultant NEPC, LLC shall oversee the RFP process. If you are interested, you must submit a complete Proposal by 3:00 CST on October 3, 2016, responses submitted after this time and date will not be considered. All responses should be submitted electronically to: - 1 -

2 Search Contact NEPC (Consultant Contact) Chicago Policemen's Annuity and Benefit Fund Aoifinn Devitt The subject line of your submission should be Chicago Police Income Generating RFP. You must also send one (1) bounded hard copy of all your proposal materials (also by 3:00 pm CST on October 3, 2016) to: Aoifinn Devitt Chief Investment Officer Chicago Policemen's Annuity and Benefit Fund 221 North LaSalle Street, Suite 1626 Chicago, Illinois and- DeAnna I. Jones Senior Analyst NEPC 10 South Wacker Drive, Suite 1230 Chicago, IL An RFP submission would be deemed complete only when ALL required documents have been completed in full and submitted as instructed above. Incomplete submissions or responses not submitted as instructed will be rejected and any follow on submissions in support of an application filed earlier will not be entertained under any circumstances. Also, failure to provide requested information in the enclosed template will disqualify respondents from further consideration. A complete list of the documents required for this RFP is included the end of this document

3 SERVICES TO BE PROVIDED The purpose of the Income Generating RFP for Chicago PABF is to allocate $10 million to $40 million to one-to-three managers whose investment strategies focus on producing returns through strong contractual cash-flows versus price appreciation or trading acumen. This RFP is meant to be inclusive of both public and private credit instruments in both primary and secondary markets across the US and globally, as well as equity-based income generating strategies. Managers may focus on all of these areas broadly or only a small subset of this universe (provided they meet the general requirements and are not a specifically excluded strategy). The RFP is meant to exclude the following: dedicated direct lending strategies; MLPs; dedicated real estate equity funds; mezzanine funds; and traditional fixed income strategies (i.e. bank loan portfolios, high yield portfolios, emerging market debt portfolios, etc.). QUIET PERIOD The Quiet Period begins when the RFP is issued and ends when the manager is selected by the Board or the process is declared to be complete. Managers will not contact Board members during the Quiet Period. A manager will be disqualified from the selection process for violating the Quiet Period. The Quiet Period for this RFP begins September 1, Questions concerning the RFP must be submitted in writing via to the investment consultant s search contact (with a copy to the fund s Chief Investment Officer, Aoifinn Devitt) by 3pm CST on Monday, September 12, Responses to properly submitted questions will be consolidated in a single Q&A document and posted on the consultant s website by Monday, September 19, No phone calls please. REQUEST FOR PROPOSAL EVALUATION FACTORS Proposals will be evaluated and subsequent judgments made taking into account the following criteria: Stability and General Experience of the Firm as measured by the stability of the financial condition of the firm and experience in providing investment management services to institutional clients. Key Personnel Personnel to be assigned to this account, including key professionals, applicable portfolio managers, back-up and other staff assistance, and education and experience of all such key personnel. Expertise (a) Similar work performed for other institutions, with references - 3 -

4 of such funds to be specified in the proposal; (b) Assets under management; and (c) Investment experience broadly defined and experience as a manager of fixed income assets. Client References as measured by the quality of the references provided. Performance Prior performance will be measured on both an absolute and relative basis. Process Consistent process implementation, as measured by return consistency, portfolio construction methodology, and the implementation of risk controls. Philosophy and Style The extent to which the proposed philosophy and style best complement existing philosophies and styles and meet the requirements and expectations as presented in this RFP. Fees Reasonableness and competitiveness of fees. RFP Proposal Clarity and responsiveness to requirements as requested in the RFP. SELECTION PROCESS All RFPs will be reviewed and evaluated by the Board of Trustees of the Policemen s Annuity and Benefit Fund of Chicago (Chicago PABF) and NEPC, LLC, the Board s investment consulting firm. The Board will be responsible for the final selection of the Firm(s) hired. TERMS AND CONDITIONS PABF reserves the right to reject any or all proposals or any portion thereof, that it feels is the best interest of PABF and to negotiate with any one or more of the respondents. PABF reserves the right to cancel this procurement. Please be aware that all documents created as part of this RFP, including the responses provided by your firm as the responding Investment Advisor, shall be retained by PABF, considered public records and made available for inspection and copying as provided in Section 3 of the Illinois Freedom of Information Act, 5 ILCS 140/1, et. seq. If selected, Chicago PABF will require the execution of a management service contract

5 Please review all the included documents posted with respect to this search for an investment advisor. This RFP is neither a contract nor meant to serve as a contract. A respondent s preparation or submittal of a proposal or subsequent participation in presentations or contract negotiations creates no obligation on the Fund to award a contract or to pay any associated costs. The Fund is not obligated to award a contract to any of the respondents to this RFP. MINIMUM QUALIFICATIONS (APPLICABLE TO ALL RESPONDENTS) Please provide a signed cover letter with your response in which an authorized person acknowledges the firm s ability to meet the below requirements (for subsections (b), (k) and (l) only those that are applicable should be acknowledged). A failure to do so will constitute an incomplete response resulting in automatic elimination. The verification statement below should be part of the cover letter. To be considered for the mandate for an Income Generating investment manager pursuant to this proposal, investment management firms must provide or demonstrate the following: a) Any person or entity providing to PABF the services sought by this RFP must agree to serve as a fiduciary to the Fund in accordance with the Illinois Pension Code and to act in accordance with all requirements and standards of conduct applicable to fiduciaries; b) The proposed product can be either open-ended or closed-ended (defined as a draw-down, private equity style vehicle). If closed-ended, if the Fund term does not exceed seven (7) years (inclusive of any fund-life extensions) the Fund should have a minimum annual cash coupon of 5%. If the Fund term exceeds seven (7) years but is less than twelve (12) years (inclusive of any fund-life extensions) the Fund should have a minimum annual cash coupon of 10%. Closed-ended funds with fund terms exceeding twelve (12) years (inclusive of any fund-life extensions) will not be considered. For open-ended funds please see sections (k) and (l) herein. c) The proposing Firm must provide net Fund-level performance track record of the submitted strategy, as well as, portfolio characteristics, underlying holdings information, and other current and historical data requested in the NEPC, LLC Income Generating Strategies RFI. d) The proposing Firm must have at least $500 million in institutional (defined as pensions, endowments, foundations, and sovereign wealth funds) assets under management (AUM). e) For niche strategies, Fund AUM or targeted Fund raise must be such that Chicago PABF will not exceed 10% of the Fund s AUM

6 f) For broader investment strategies, Fund AUM or targeted Fund raise should be over $500 million. g) The proposing Firm must have been in business for at least 10 years. h) The team being proposed must have been working together for at least 7 years. i) Any Proposer qualifying as a "minority owned business", "female owned business" or "business owned by a person with a disability", as those terms are defined in the Business Enterprise for Minorities, Females, and Persons with Disabilities Act, are exempt from (d), (f), (g) and (h) above and will be evaluated for further consideration at the discretion of the Board. j) Closed ended funds must not close before March 31, 2017 or the fund must be willing to extend the close to March 31, 2017 for the Chicago Police Pension Fund. k) Open-ended funds must have delivered a minimum annualized cash yield of 5% for the past three (3) years in the submitted strategy and must have an audited track record of at least three (3) years. l) Open-ended funds must have the ability for Chicago PABF to select quarterly distributions of cash-on-cash returns up to an annualized rate of 5% per annum, even during the investment period. m) The proposing Firm must agree to a key man clause on essential investment professionals (as defined by the Chicago PABF Board) either in the Fund s LPA or in a separately negotiated side-letter. n) Provide a copy of the firms EEOC disclosure statement and description of any initiatives or guidelines your firm has on the inclusion of women and minorities. Whether you have an EEOC disclosure statement or not, each Proposer must fill out and provide the chart located in this RFP. Please note that per the law effective January 1, 2015 [40 ILCS 5/ ], the employee diversity of senior staff and investment personnel must be delineated. (Please provide as an additional exhibit) o) As provided by IL Legislation (SB 452), an applying firm must provide the following disclosures to be considered: (1) The number and percentage of staff who are minority, female, or disabled; (2) The number of contracts for services that the applying entity has with a minority owned business, female owned business, or business owned by a person with a disability; and (3) The number of contracts for service that the applying entity has with businesses other than a minority owned business, female owned business, business owned by a person with a disability, if more than 50% of the services under that contract are performed by a minority person, a female, or a person with a disability. (Please provide as an additional exhibit) p) Be familiar with and willing to adhere to Articles 1 and 5 of the Illinois Pension Code

7 q) Be familiar with and willing to adhere with the Illinois Freedom of Information Act (5 ILCS 140 et seq.). r) Be familiar with and willing to adhere to the Investment Transparency section of Illinois code and permit the Fund to list your firm on its website and a brief description of any agreement for investment services. s) The proposing firm must complete the Investment Certification attached as Exhibit G relating to specific legal requirements of Chicago PABF that will be required in a side letter or otherwise if a proposal is accepted. VERIFICATION (Please include in the cover letter) I certify under penalty of perjury, that I am a responsible official (as identified above) for the business entity described above as a Proposer, that I have personally examined and am familiar with the information submitted in this disclosure and all attachments, and that the information is true, accurate, and complete. I am aware that there are significant penalties for submitting false information, including criminal sanctions which can lead to imposition of a fine and/or imprisonment. (Firm Name) (Name of Proposed Fund/Product) (Name and Title) (Signature) (Date) - 7 -

8 Document Checklist for all Respondents The following documents are required for ALL respondents: Exhibit A Exhibit B Exhibit C Exhibit D Exhibit E Exhibit F Exhibit G Attachment 3 Attachment 4 EEOC Statement Diversity Chart (provided as an excel attachment labeled Exhibit B Employee Diversity Chart ) Response to usage of minority and women owned external vendors Completed price sheet and firm profile questionnaire ((Provided as a word document labeled Exhibit D - Price Sheet and Firm Profile Questionnaire ) Completed firm questionnaire (Provided as a word document labeled Exhibit E - NEPC Research Manager RFI Income Generating Investment Management Services ) Form ADV (parts I and II) Investment Certification as to certain legal requirements (provided as an word attachment labeled Exhibit G Legal Disclosure ) Cover Letter that includes the verification statement Detailed Biographies Investment Write-Up Referenced under N in the minimum qualifications Referenced under N in the minimum qualifications Referenced under O in the minimum qualifications Referenced under S in the minimum qualifications Listed under the minimum qualifications Open End Fund Respondents must provide the following documents: EXCEL spreadsheet detailing historical net monthly performance for all comingled products of the Firm since inception Attachment 1 EXCEL spreadsheet detailing historical assets under management for the Firm. Please break out this data in two aspects: Attachment 2 1. by vehicle type Commingled Funds/SMAs/ Fund of Ones; 2. by strategy related/non-strategy related. Closed End Fund Respondents must provide the following documents: Provide a historical track record for all past closed end vehicles offered by the Attachment 1 firm (Provided as an excel attachment labeled Attachment 1 - Closed End Fund Performance ) EXCEL spreadsheet detailing historical assets under management for the Firm. Please break out this data in two aspects: Attachment 2 1. by vehicle type Commingled Funds/SMAs/ Fund of Ones, 2. by strategy related/non-strategy related