MUNICIPAL EMPLOYEES’ ANNUITY AND BENEFIT FUND OF CHICAGO

Request for Proposal:

Master Trust and Custody, Foreign Exchange, Securities Lending and Benefit Payments

August 21, 2012

  1. OVERVIEW

The Municipal Employees’ Annuity and Benefit Fund of Chicago (the “Fund” or “MEABF”) hereby issues a request for proposals (“RFP”) from qualified institutions (acting in the capacity of a plan fiduciary) that provide any or all of the following services: (1.) Core and Ancillary Custody Services, including, but not limited to, the following services: domestic and international master trust/custodial services, securities safekeeping, settlement, valuation, foreign exchange services, performance measurement, collection of income, and providing a management/accounting and information retrieval system, among others; (2.) Securities Lending Services; and (3.) Benefit Payment Services (collectively, the “Procured Services”). A firm submitting a proposal is referred to as “Respondent(s)” or “Provider(s)”. While, all else equal, it is the preference of MEABF to award a single contract for all the services listed above, MEABF reserves the right to contract separately for each service. In the Questionnaire section of this document, Respondents have the ability to select which services they offer in response to this RFP. From the services selected, MEABF may award a contract for one or more services to one or more Respondents. Please do not respond to this RFP unless your firm is willing to provide any service you have selected in Questionnaire section either individually or on a bundled basis. Any contract(s) awarded as a result of this process will be for a period of five (5) years or such other period of time as determined by the Fund.

All forms needed for submitting a response to this RFP are available on the Fund’s website at: Respondents to this RFP are responsible for monitoring the Fund’s website for information pertaining to the RFP while the RFP is outstanding.

The MEABF is a defined benefit, single employer benefit plan that was established in 1921 by an act of the Illinois General Assembly to provide disability and retirement benefits to qualified employees of the City of Chicago and the Chicago Board of Education. The sole purpose of the Fund is to pay benefits to its members, which are funded by a combination of member contributions, taxes levied by the City of Chicago, and investment earnings. The MEABF is a component unit of the City of Chicago, and as such, is included in the City of Chicago’s financial statements as a pension trust fund. The MEABF’s net assets total approximately $5 billion as of the date of this RFP. More information regarding the MEABF can be found by reviewing the Illinois Pension Code (40 ILCS 5/ Article 8) and its website at:

  1. RFP TIMELINE

1. Date of Issue: August 21, 2012

2. Deadline to Submit Written Questions: September 7, 2012, 3:00PM CDT

3. Q&A Document Posted:September 14, 2012

4. Final Responses Due: October 12, 2012, 3:00PM CDT

5. Potential Interviews: T.B.D.

6. Finalist Notified By:T.B.D.

***The timeline is subject to change. Any changes to the timeline will be communicated to all known Respondents and posted on the Fund’s website.***

  1. MEABF RFP PROCEDURES

The Fund will post notice of this RFP on its website. Notice may also be provided to the Fund’s and/or the investment consultant’s universe of Providers. Providers that do not receive an RFP from the MEABF or the investment consultant are encouraged to compete and may obtain the RFP document from the MEABF website. Neither this RFP nor any response to this RFP should be construed as a legal offer.

All interested Respondents must submit their responses in accordance with the proposal submission instructions below. The MEABF reserves the right to reject any or all proposals submitted. All material submitted in response to the RFP will become the property of the Fund. The MEABF is not responsible for any costs incurred by the Respondents in responding to this RFP.

Fund staff and investment consultant shall open the responses and thoroughly review each for content, quality and compliance with the RFP’s requirements. Fund staff and investment consultant will compile a list of all Respondents to the RFP, identifying which responses are complete and incomplete.

If it becomes necessary to revise any part of the RFP, or if additional information is necessary for a clarification of provisions within this RFP, prior to the due date for proposals, a supplement will be provided to all known Respondents and posted on the Fund’s website. If a supplement is necessary, the Fund may extend the due date to accommodate any additional requirements.

Respondents are advised that proposal materials are subject to the Illinois Freedom of Information Act (5 ILCS 140). After completion of the RFP, selection by the Fund and successful negotiation of a contract, if any, proposals submitted may be viewed and copied by any member of the public, including news agencies and competitors. Respondents claiming a statutory exception from the Illinois Freedom of Information Act for information within the Respondents’ proposals must identify relevant language as confidential, and identify in the email transmission of the proposal whether confidential information is included. Further, each page of confidential documentation must be labeled as such. The Respondent must also specify which statutory exemption applies for each piece of confidential information. The Freedom of Information Act can be found at the Illinois General Assembly’s website (

MEABF reserves the right to make determinations of confidentiality. If MEABF disagrees with a Respondent’s confidential designation, it may either reject the proposal or discuss its interpretation of the exemptions with the Respondent. If agreement can be reached, the proposal will be considered. If agreement cannot be reached, MEABF will remove the proposal from consideration.

Following review and evaluation of complete responses from interested Respondents, the field of candidates will be narrowed to a smaller list of the most highly qualified Respondents. The Fund’s staff and investment consultant will meet with representatives of each Respondent to obtain an independent assessment of the Respondent’s capabilities.

Following the interviews with the selected Respondents, the Fund’s staff and investment consultant shall prepare Respondent recommendations for approval by the Fund. The finalists may be asked to appear before the Fund’s Board of Trustees (the “Board”) to present their firms’ qualifications. The Board shall accept or modify the recommendation and make the final selection, if satisfied with the Respondents’ capabilities.

The Fund shall conduct the RFP process in accordance with applicable provisions of the Illinois Pension Code, the Fund’s Ethics Policy and any other relevant authority under the Illinois Compiled Statutes. All ex parte communications between Fund staff and interested parties, including Respondents, or non-interested parties, are prohibited.

No Respondent shall retain a person or entity to influence (i) the outcome of an investment decision or (ii) the procurement of investment advice or services of the Fund for compensation contingent, in whole or in part, upon the decision or procurement.

  1. PROPOSAL SUBMISSION

The Fund’s staff and investment consultant, Marquette Associates, Inc., shall oversee the RFP process. If your firm is interested in submitting a proposal, you must submit an electronic copy of the complete proposal by 3:00 PM, CDT, October 12, 2012 to:

SEARCH CONTACT:MEABF Search

Marquette Associates, Inc.

Procedural and substantive questions concerning the RFP must be submitted in writing via e-mail to the Search Contact by 3:00 PM, CDT, September 7, 2012. Responses to questions properly submitted will be consolidated in a single Q&A document and posted on the Fund’s website on or about September 14, 2012. The Q & A document will not identify the source of the query.

PLEASE NOTE: Respondents WILL NOT receive individualized responses from the Search Contact, in response to questions submitted. Respondents must review the Q & A document posted on the Fund’s website to receive answers to all questions submitted.

If Fund staff or the investment consultant has a question(s) regarding how to interpret a Respondent’s proposal, Fund staff and/or the investment consultant is/are authorized to request additional information from that Respondent.

Any proposal received after the october 12, 2012 due date and time will not be considered.

PROPOSALS MUST CONTAIN THE FOLLOWING DOCUMENTS:

  1. Transmittal Letter. A transmittal letter must be submitted on the Respondent’s official business letterhead. The letter must identify all documents provided in response to the RFP, and must be signed by an individual authorized to bind the Respondent contractually. An unsigned proposal shall be rejected. The letter must also contain the following:

A.Statement that the proposal is being made without fraud or collusion; that the Respondent has not offered/received any finder’s fees, inducements or any other form of remuneration, monetary or non-monetary, to/from any individual or entity relating to the RFP, the Respondent’s proposal or the Fund’s selection.

B.Statement that discloses any current business relationship or any current negotiations for prospective business with the Fund or any member of the Fund’s staff or Board.

  1. Questionnaire. The Respondent must address the questionnaire items in the RFP in the order in which they appear in the RFP. Further, each question number and question in the RFP shall be repeated in its entirety before stating the answer. Any supporting documentation requested in the Questionnaire must be provided.
  2. Appendix I: Fee Schedules. The Respondent must complete the Excel datasheets referenced in Appendix I.
  1. SCOPE OF SERVICES

The three services covered by this RFP— Core and Ancillary Custody Services; Securities Lending Services; and Benefit Payment Services—are discussed below. In the Questionnaire section of this document, Respondents are asked to provide responses related to any or all services they are interested in providing. MEABF will require Respondents to provide pricing information for services individually as well as on a bundled basis.

Core and Ancillary Custodial Services

Accounting/Audit

1.Must provide trade date multi-currency (local and US dollars) accounting for all securities and full accrual accounting for all assets.

2.Must provide accounting for the following:

  1. Dividends and interest, corporate actions (including mergers, acquisitions, tenders, stock splits and dividends, warrants and spin-offs)
  2. Securities lending
  3. Domestic and international fixed income and equity portfolios
  4. Equity real estate and REIT portfolios
  5. Futures and multi-currency derivatives
  6. Private equity, including domestic and non-US limited partnerships for LBO’s, venture capital, etc.

3.Must provide access to a monthly general ledger activity file and monthly general ledger balance file through a secure means of electronic file transmission for the purposes of being loaded directly into MEABF’s Microsoft Dynamics™ GP 10.0 accounting and general ledger system or any such system MEABF may implement in the future.

4.Must provide payable date posting for dividends, bond interest and principal, and interest and pay down on mortgage pass-through certificates.

5.Accounting must be on a calendar year basis (January 1 – December 31).

6.Must provide a secondary pricing source for comparison to the primary source for pricing securities.

7.Investments must be reported at cost and market value.

8.The Respondent must confirm that all information concerning holdings and transactions will be available for inquiry, download or print.

9.A comprehensive pricing protocol and system must be in place to independently ensure the accuracy of the prices received from various external sources on a daily basis. This system will employ procedures to verify the primary price to a secondary pricing source, compare prior day prices to current day prices, and investigate changes outside established tolerances as well as changes from prior month that appear unreasonable in relation to current market trends. Pricing sources must be provided upon request.

10.In all markets, the Custodian must use multiple and/or reliable sources/vendors for corporate action information collection and notification. A detailed reporting of client entitlements and deadlines must be provided within a 24-hour period.

11.Custodian’s automated systems must interface with MEABF’s general ledger and accounting system to fully comply with MEABF’s requirements for reconciliations, pricing, tolerance audits, data quality and variance resolution.

12.Must interact with the Fund’s auditors in furtherance of the audit process and supply information specific to the audit process in a downloadable format, as requested by the auditors.

13.Must adhere to all current accounting standards as well as implement in concert with the Fund any new accounting standards that impact the Fund’s financial reporting process, including providing information required by new accounting standards related to the Fund’s assets.

Securities Settlement

14.Must be a participating member and have access to securities settlement through DTC, Federal Reserve wire system, PTC and at other depositories (both domestic and international).

15.Must have the ability to settle physically held securities.

16.Must have the ability to execute foreign exchange transactions.

17.Must provide buy-fail float and contractual settlement date posting of sales.

18.Trade data must be electronically accessible by MEABF, its investment advisers and consultants.

Cash Management

19.Must provide a Short Term Investment Fund (STIF) for daily cash sweeps.

20.Must provide for same day settlement of cash trades, such as physical, DTC, and Fed wireable repo and term purchases.

21.Must transfer cash between accounts, make and accept wire transfers of funds (including provision of Fed reference numbers upon request) and accept fund contributions via ACH.

22.Must provide overnight investment management services for funds received after daily sweep deadline. Any fees or costs associated with these services must be disclosed.

Corporate Actions, Class Actions, and Proxy Processing

23.Must provide in a timely manner all annual reports, proxy voting cards, and proxy statements to MEABF’s proxy voting agent.

24.Must ensure that powers of attorney and other special global proxy voting requirements are current or met, in cooperation with the Fund’s proxy voting agent, to allow for timely voting of global proxies.

25.Must provide timely notification to MEABF’s investment advisers of corporate actions regarding conversion privileges, issuance of rights, mergers, tender offers, reorganizations and other actions requiring decisions by MEABF’s investment advisers.

26.Must provide timely notification of class action litigation and provision of the necessary securities information to MEABF.

27.Must file claims for securities class action awards in a timely manner and carefully monitor and report to Fund as to collection of the amounts to which the Fund is entitled.

Technology and Systems Support

28.Must provide a PC, workstation-based or thin-client-based system with access to management information and accounting systems with the capability of providing the following information:

  1. Current and historical prices, market values, and exchange rates in effect at times of pricing international securities
  2. Composite portfolios
  3. Current and historical transactions by security, by account, and by asset class
  4. Current and historical holdings in any aggregate
  5. Customized reports as required
  6. Ad hoc query and reporting

29.Must provide MEABF staff with the ability to review all externally managed portfolios.

30.Must safeguard records against potential loss or destruction by fire, theft, vandalism, storm, earthquake, or any other hazard, by retaining backup data in a secure off-site location so that records (current at least to the prior month-end and the end of the preceding day) can be recreated within a 24-hour period.

31.Must have an established and proven business continuity plan for emergency situations in place that provides for record re-creation and operations resumption within twenty-four hours of any occurrence of any major disaster or other cause which destroys records and/or disrupts normal operation of the Custodian’s systems.

32.Computer records of all audited investment transactions and month-end positions must be maintained on electronically readable storage media for a minimum of eight years. These records must be checked for viability on an annual basis and migrated, if necessary, to more current technology in order to maintain accessibility during the entire retention period.

33.The Custodian’s online systems must report the same information as the audited accounting systems once audited values are available.

Reporting Requirements

34.The format (e.g. hard copy or any number of electronic file formats) and mode of delivery (e.g. online download, FTP transmission, mailed CDs, etc.) of all reports must be agreeable to MEABF.

35.Must provide audited monthly holding reports to MEABF and its investment consultant to be received no later than fifteen business days after month-end.

36.Must provide accurate monthly, quarterly, year-to-date and annual reports on all transactions, income, and other pertinent investment data, in a format acceptable to MEABF and its investment consultant, no later than fifteen business days after the end of each month.

37.Must provide reports in a format acceptable to MEABF and its investment consultant.

38.Must provide annually the Statement on Auditing Standards “SAS” No. 70 report on processing of transactions by service organizations.

39.Must provide monthly and annual securities lending reports.

40.Must provide reports of daily transactions including domestic trades affirmed, un-affirmed, failing, pending, etc.

41.Must provide monthly performance measurement reports to be received no later than twelve business days after month-end.

42.Must provide quarterly performance measurement, attribution and other analytic reports.

43.Must provide ad hoc reporting during preparation of the Fund’s annual report.

44.Must provide a delivery mechanism to create annual extract reports of portfolio activity for the Fund’s annual financial and compliance audits.

45.Must provide trial balance reports relating to MEABF investment adviser accounts on a monthly basis.