Questions_and_Answers_(1_of_2).docx

Questions and Answers Emerging Market Equities Investment Management Services Questions (1 of 2)

1. Question 01: Our firm will be participating in RFP PBGC01-RP-14-0012 – Emerging Markets Equities Investment Management Services. I’m wondering if we could obtain a word version of the document to make completion more efficient?

PBGC Response 01: A word version of the Section C Statement of Objective will be posted to FedBizOpps.

2. Question 02: As part of that process, we have reviewed the criteria required before the PBGC will accept the RFP response. ABC company meets all the necessary criteria and we do have a CIT (Collective Investment Trust) commingled vehicle. Before we submit the RFP I am hoping to confirm whether you will deem this to be an acceptable format for tax-exempt investors. We are confident that it would be acceptable but I want to be sure. If you would confirm that a CIT is an acceptable commingled vehicle I would appreciate it.

PBGC Response 02: Yes – a CIT is an acceptable commingled vehicle.

3. Question 03: I wanted to follow-up with you directly to double check on a mandatory pre-condition of the EM RFP that was just made available on the PBGC web site last week. As a firm ABC Company is over $10bn in AUM and we have roughly $1.3bn in EM. My understanding is that we must have at least $2bn in EM to submit the RFP but I wanted to make sure.

PBGC Response 03: $2 billion in EM is a mandatory requirement. Proposals shall meet all of the mandatory requirements in phase 1 in order to be further evaluated in phase 2. See section M of the RFP for more information.

4. Question 04: We are keen to reply to this RFP and are working on our questions. Is there any flexibility on when we can submit questions for consideration?

PBGC Response 04: No please submit all questions by the date noted in the RFP.

5. Question 05: Volume II-Phase 2-Technical Proposal-III. Technical Approach-L. Performance: Page 86 of 91. Question 1 and 2; please confirm whether you require the composite performance or whether a representative account would be sufficient.

PBGC Response 05: You must submit composite returns.

6. Question 06: Volume II-Phase 2-Technical Proposal-III. Technical Approach-L. Performance Page 89 of 91. Question 3, regarding key risk statistics, please confirm whether you would accept risk statistics calculated by eVestment.

PBGC Response 06: PBGC will evaluate the proposal submitted in accordance with the stated criteria in section M.

7. Question 07: Attachment B – Page 74– “Provide the names of the major (i.e., greater than $100 million) U. S. tax-exempt pension, insurance, and other client accounts currently invested in the proposed strategy (3/31/2014 market value). Question: In accordance with our client confidentiality policies, and if we do not receive permission from our current clients, can we provide the type of client in lieu of actual client names?

PBGC Response 07: Yes – please be as descriptive as possible.

8. Question 08: There is no explicit mention of the use of derivatives in this mandate. Question: can you please confirm if derivatives are permissible for this mandate? Please note we will not use derivatives for portfolio leverage. Our derivative positions do not represent increased economic exposure to risks; rather they represent a more efficient means of gaining and managing risk as it relates to country and currency exposures.

PBGC Response 08: Leverage will not be allowed. Derivatives are permissible. Please discuss in your investment strategy how you use derivatives.

9. Question 09: Please confirm the “through date” for the IR calculation requirement – is it 12/31/13 or 3/31/14? Section C; Description/Specifications/Work Statement; Statement of Objectives; Mandatories, Page 12 states the IR requirement is through 12/31/13 and Attachment A; M.5 Volume II- Phase 1 – Mandatory Requirements/Qualification Compliance (E.) states the IR requirement is through 3/31/14.

PBGC Response 09: The through date for the IR calculation is 3/31/14. See Amendment 01.

10. Question 10: Section III.B.6 (page 80) The chart pasted on this page is cut off on the right side. How do we obtain a complete table?

PBGC Response 10: The last column is entitled Unclassified. No other columns were cut off.

11. Question 11: Section III.L (page 86) “performance data must be submitted on a computer disk…”. Is there a specific type of disk required, i.e. CD, Thumb Drive, etc.?

PBGC Response 11: Please submit data by CD only no thumb drives or other media device will be accepted.

12. Question 12: Section C. Statement of Work – Our firm keeps the results of our annual disaster recovery testing confidential. Is it sufficient to provide an annual high-level summation of our testing results for mission critical functions related to this assignment? If not, what would be your minimum requirements for disaster recovery test results reporting?

PBGC Response 12: Yes – an annual high-level summation of your testing results for mission critical functions is acceptable.

13. Question 13: M.6 Volume II, Phase 2 - Technical Proposal, Section A: Question 7 asks for details regarding the Contractor’s financials. Our firm has no debt and is solvent; however, as a privately-held company, we prefer to keep our financial records confidential. Is it acceptable to provide an unqualified opinion letter from our firm’s auditor?

PBGC Response 13 : In accordance with the RFP Section M.6, I, A(7), if audited or unaudited financial statements are not available, provide a letter that confirms a positive net worth for the firm from an independent CPA firm and provides details on the financial condition of the firm.

14. Question 14: M.6 Volume II, Phase 2 - Technical Proposal, Section A: Question 7 asks for details regarding the Contractor’s financials. Our firm has no debt and is solvent; however, as a privately-held company, we prefer to keep our financial records confidential. We are willing to provide a written certification to that effect. Would that be acceptable?

PBGC Response 14: In accordance with the RFP Section M.6, I, A(7) If audited or unaudited financial statements are not available, provide a letter that confirms a positive net worth for the firm from an independent CPA firm and provides details on the financial condition of the firm.

15. Question 15: M.6 Volume II, Phase 2 - Technical Proposal, Section A: Question 7 includes language stating “If the firm does not provide its non-SEC financial statements, provide a letter that confirms a positive net worth for the firm from an independent CPA firm and provides details on the financial condition of the firm.” Could you please provide clarification on what details on the financial condition of the firm are required?

PBGC Response 15: Please provide as much detail as possible. It is up to each firm to provide as much detail as possible to ensure the PBGC has the ability to evaluate this factor as required in accordance with the evaluation factors in RFP. See RFP section M for more details on the evaluation factors.

16. Question 16: One of our qualified emerging markets equity strategies was incepted in April 2006. We made material changes to the strategy in May 2009, which included a new portfolio manager and investment process, but not a rebranding of the strategy. Given that the 2009 track record reflects the entire history of how the strategy is currently run, does the PBGC prefer we use the 2009 inception or the 2006 inception?

PBGC Response 16: The 2009 inception is required by PBGC.

17. Question 17: Would you consider a strategy with $1.95 billion in aum as of March 31st, and over $2 billion today?

PGBC Response 17: No, in accordance with the RFP, this strategy would not meet PBGC’s mandatory criteria and therefore, would not be considered. See RFP for more details.

18. Question 18: We manage 2 closely related quantitative strategies that use the same stock selection model and are managed by the same portfolio management team. One has an Active Share target of 30% and the other has an Active Share Target of 60%. Can we combine the assets of these strategies to meet the minimum $2 billion aum as of 3/31/2014?

PBGC Response 18: No, in accordance with the RFP, this strategy would not meet PBGC’s mandatory criteria and therefore, would not be considered. See RFP section M for more details.

19. Question 19: The proposed product must be offered to PBGC in a commingled fund format acceptable to tax-exempt investors rather than a separate account. Does the proposed product need to be currently available in a commingled fund format? If selected, ABC Company would be happy to offer a commingled fund format for the PBGC.

PBGC Response 19: PBGC would accept a newly created commingled fund. The fund could be created after contract award. Please provide details on how the proposed product would be different if managed in a commingled fund structure.

20. Question 20: The Offeror has a minimum of $2 billion in assets under investment management in the proposed product as of 3/31/14. ABC Company has extensive investment experience in dedicated Emerging Markets Equity products, with assets in excess of $9 billion. For the proposed product however, the assets are currently below $2 billion. The proposed product meets all other mandatory criteria with regard to track record and has exhibited the strong performance characteristics required by the PBGC. We would be grateful for the PBGC’s consideration of the proposed product.

PBGC Response 20: In accordance with the RFP, this strategy would not meet PBGC’s mandatory criteria and therefore, would not be considered. See RFP section M for more details.

21. Question 21: Section II: Past Performance, Question 1: In response to your request for 3 references, would the PBGC be willing to accept some references for the same investment team but other strategies understanding that the EME product we manage is a 40-Act mutual fund?

PBGC Response 21: Relevant past performance pertains to work that is similar with regard to scope, magnitude and nature to the solicited effort, as described in Section C, Statement of Objectives.

22. Question 22: Section C1 Deliverables: Is there flexibility around the deliverables based on the investment vehicle? Deliverable #1 requires a holdings report 10 business days after each month-end; our 1940 Act fund only discloses full holdings 60 days after fiscal quarter-end.

PBGC Response 22: No. PBGC requires monthly disclosure of fund holdings.

23. Question 23: As background, we have managed dedicated emerging markets equity strategies on behalf of our clients since 1997 with over $4.4B in AUM (as of March 31, 2014). Currently our investment team manages two similar strategies in emerging markets equity:

· Emerging Markets Equity (EME) – a diversified strategy which invests across the full capitalization spectrum within the emerging markets and holds 80-100 names. Given the strategy’s small-cap exposure it is more capacity constrained. Currently, assets under management in this strategy are approximately $4.4 billion.

· Emerging Markets Select (EM Select) - an emerging markets equity strategy that has greater concentration in mid- and large-cap names and as such provides greater liquidity. This strategy is a high conviction portfolio which holds 60-80 names. We established this strategy for an institutional client on December 31, 2010 given that client’s interest in a more concentrated yet liquid emerging markets equity portfolio. Currently, assets under management for this strategy are approximately $60 million. It is our intent to grow the assets under management in EM Select, given that we recently achieved our competitive three year performance track record – similar to the EME strategy for that period; and we expect broader marketing activity to commence later this year.

Similarities of our two emerging markets equity strategies include the following:

· Managed by the same investment team (portfolio managers and research analysts).

· Utilize the identical fundamentally-oriented approach and investment process. Our EM Select strategy has a higher minimum trading volume threshold of $5M versus $2M for our EME strategy, which results in few-if not any-small caps and a more concentrated portfolio.

· As of 12/31/2013, the 3-year results and risk metrics (beta, tracking error) for EM Select are similar to those of our EME strategy, however, our EM Select’s approach suffered less in 2011 (due to EM small cap’s underperformance) and did not benefit as much from our small cap that did well in 2013 on a relative basis.

Given the similarities of the strategies, we would appreciate the PBGC’s consideration of our total assets under management (EM + EM Select), which are managed by the same team with the same investment process, to meet the assets under management requirement.

PBGC Response 23: No, this would not be acceptable.

24. Question 24: ABC Company would be thrilled to launch a commingled fund in our EM strategy. Would the PBGC be willing to serve as the initial /anchor institutional investor in the fund during the period we are raising additional assets?

PBGC Response 24: PBGC would accept a newly created commingled fund. The fund could be created contract award. Please provide details on how the proposed product would be different if managed in a commingled fund structure.

25. Question 25: Acknowledging that you requested data as of December 31, 2013; would you be willing to consider an information ratio statistic as of May 31, 2014 to meet your information ratio requirement? Our EM Select strategy was incepted as of December 31, 2010 and we believe a longer timeframe for evaluation purposes will be helpful. Additionally, would you please clarify if you would like a single data point (reflecting a moment in time) or multiple data points (over multiple time periods) of at least 0.40 to meet your information ratio requirement?

PBGC Response 25: The through date for the IR calculation is 3/31/14 (See Amendement 01). PBGC listed two different dates in the RFP. The information ratio must be an average of all 36-month information ratios over the last seven years, or since inception if the track +record is less than seven years through 3/31/14, using the methodology listed in the performance section of Section M6.

26. Question 26: Section L - INSTRUCTIONS, CONDITIONS, AND NOTICES TO OFFERORS (Page 60; Paragraph 3) – “Proposal Format and Composition”: It’s noted within the RFP that offerors can only advance to Phase II if they receive a “Pass” rating on Phase I. Can you please confirm that both Volume I and Volume II (with Phases I & II) are due on the same deadline of July 18 @ 9AM?

PBGC Response 26: Yes, the entire proposal (Volume I & II) are due on the same deadline of July 18 @9AM.

27. Question 27: Sections H and I – Please clarify if Sections H and I of the Bid Packet were for reference only. We are unclear as to the purpose of these sections as some of the items did not seem applicable to this type of solicitation. Also, are these items negotiable?

PBGC Response 27: The clauses and provisions referenced in section H and I are prescribed by the local agency and the Federal Acquisition Regulation (FAR) through a myriad of statutes, regulations, and policies. Many of the contract clauses referenced are mandatory and afford the Government special contractual rights including the right to unilaterally change contract terms and conditions or terminate the contract. All clauses will become part of the final contract once your offer is made and the Government accepts. If there are specific clauses or provisions that your firm takes exception to please note them in your proposal response.

28. Question 28: Section H. Special Contract Requirements, H.4 paragraph 2 & 3 (pg. 25) – While our firm conducts background checks upon an employee’s hiring, we prefers to not subject our employees to additional background checks mandated by external parties. Would the Government refuse to enter into a contract, or terminate an existing contract If the firm refuses to conduct or subject employees to background checks?

PBGC Response 28: It has been determined that this Clause (H.4 PBGC-03-003) does not apply to this acquisition. The clause is hereby removed from the solicitation by Amendment 01.

29. Question 29: M.6 Volume II, Phase 2 - Technical Proposal, Section A: Question 7 asks for details regarding the Contractor’s financials. If awarded the contract, are there any ongoing requirements regarding disclosure of the Contractors financial information to the Government? (i.e. annual reporting requirements, etc.)

PBGC Response 29: There will be no ongoing requirement regarding disclosure of the Contractors financial information.

30. Question 30: Section I.42, paragraphs L and M (page 39), outline the Government’s termination rights, but there is no mention of termination rights for the Contractor. What are the managers/contractors termination rights under your standard agreement, and would these termination rights be negotiable in the final contract if awarded the mandate?

PBGC Response 30: Only the Government can reserve the right to terminate the contract. This is non-negotiable. See FAR Clause 52.212-4.

31. Question 31: Can you please explicitly outline which sections of the RFP are applicable to the Emerging Markets Equities Investment Management Services search?

a. For example, are we responsible for fully completing Page 1 (BLOCKS 12, 17, 23, 24, & 30) and commenting to / executing the non-investment management specific sections such as Sections D, E, F, etc.?

PBGC Response 31: All sections of the RFP are applicable. For Page 1, blocks 17 and 30 are necessary.

32. Question 32: Section H. Special Contract Requirements, H.4 paragraph 3 (pg. 25) – Would only portfolio managers be subject to the terms in paragraphs 2 & 3 relating to reporting of non-US citizens and background checks? If not, are only investment professionals (i.e. research analysts, traders, portfolio managers, etc.) assigned to the Contractor’s proposed strategy subject to background checks? Our firm has over 1000 employees. Could you please confirm that every employee across the organization would not be subject to these reporting requirements and background checks?

PBGC Response 32: It has been determined that this Clause (H.4 PBGC-03-003) does not apply to this acquisition. The clause has been removed from the solicitation.

33. Question 33: We are in the process of submitting the RFP. Specific to suitability of contractors, is it required that managers chosen be U.S. citizens or have a U.S. work permit (VISA) if non-U.S. residents? Please note ABC company is based outside the U.S.

H. 4 PBGC-03-003 SUITABILITY DETERMINATION REQUIREMENTS (JAN 2012)

(2) The Contractor shall notify the Contracting Officer in writing providing the name and the nationality of non-U.S. citizens who are legal residents, providing a copy of their VISA (work permit) or an alien who has been lawfully admitted for permanent residence as evidenced by Alien Registration Receipt Card Form I-151, or who presents other evidence from the U.S. Citizenship and Immigration Services that employment will not affect his/her immigration status. PBGC reserves the right to refuse any foreign national participation on this contract and to refuse them permission to enter PBGC premises.

PBGC Response 33: It has been determined that this Clause (H.4 PBGC-03-003) does not apply to this acquisition. The clause has been removed from the solicitation.

Note: PBGC anticipates posting the remainder of the questions no later than Friday, June 27, 2014.