pension reserves investment management board

Pension Reserves Investment Management Board

84 State Street, Suite 250

Boston, Massachusetts 02109

April 17, 2006Dear Potential Provider:

The Massachusetts Pension Reserves Investment Management Board (PRIM) is requesting proposals from qualified firms interested in providing U.S. equity portable alpha investment management services.

In order for proposals to be considered by PRIM, each prospective provider must respond to the Request for Proposals by submitting an electronic copy of its proposal via e-mail by 3:00 p.m., EDT, Wednesday, May 17, 2006 to [email protected]. In addition, an original and 1 copy of the proposal should be sent to:

Amy Prehn FinkelsteinInvestment Officer Pension Reserves Investment Management Board84 State Street, Suite 250Boston, Massachusetts 02109

Further instructions for proposal submission, including information regarding the number of copies to be sent to Cliffwater LLC, are included in the Request for Proposals. Questions concerning the Request for Proposals must be submitted by 3:00 p.m., EDT, Friday, May 5, 2006.

We appreciate the time and effort required to respond to this Request for Proposal. Each firm submitting a proposal to PRIM can be assured that the same time and effort will be expended in evaluating the proposals that are submitted for consideration. We look forward to your response.

Sincerely,

Michael TravagliniExecutive Director

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Timothy P. Cahill, ChairMichael Travaglini, Executive Director

mailto:[email protected]

PENSION RESERVES INVESTMENT MANAGEMENT BOARD

84 State Street, Suite 250, Boston, Massachusetts 02109

Timothy P. Cahill, ChairMichael Travaglini, Executive Director

REQUEST FOR PROPOSALS

U.S. EQUITY PORTABLE ALPHAINVESTMENT MANAGEMENT SERVICES

April 2006

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Table of Contents

I. INTRODUCTION............................................................................................................................................. 4

II. BACKGROUND INFORMATION................................................................................................................ 4

A. LEGAL STRUCTURE OF PRIM.......................................................................................................................... 4B. PRIM’S ADVISORS........................................................................................................................................ 5C. GENERAL DESCRIPTION OF PRIM’S ASSETS....................................................................................................5D. TOBACCO DIVESTITURE.................................................................................................................................. 5

III. SCOPE OF SERVICES................................................................................................................................. 6

IV. MANAGEMENT AGREEMENT................................................................................................................. 7

V. PROPOSAL SPECIFICATIONS.................................................................................................................... 7

A. PROPOSAL DEADLINE..................................................................................................................................... 7B. REQUIRED ATTACHMENTS AND ENCLOSURES..................................................................................................8C. PUBLIC RECORD............................................................................................................................................. 9D. WITHDRAWAL/IRREVOCABILITY OF RESPONSES...............................................................................................9E. WAIVER/CURE OF MINOR INFORMALITIES, ERRORS AND OMISSIONS................................................................9F. COMMUNICATIONS WITH PRIM....................................................................................................................... 9G. QUESTIONS RELATING TO THIS RFP.............................................................................................................. 10H. INCURRING COSTS........................................................................................................................................ 10I. REJECTION OF PROPOSALS............................................................................................................................. 10

VI. SELECTION PROCESS............................................................................................................................ 10

A. NON-QUALIFYING PROPOSALS..................................................................................................................... 10B. SELECTION OF FINALISTS............................................................................................................................. 11C. SELECTION OF INVESTMENT MANAGERS.......................................................................................................11

VII. TENTATIVE TIME TABLE..................................................................................................................... 11

VIII. MINIMUM CRITERIA............................................................................................................................ 13

IX. SELECTION CRITERIA............................................................................................................................ 15

X. QUESTIONNAIRE....................................................................................................................................... 17

XI. FEE PROPOSAL......................................................................................................................................... 54

XII. REPRESENTATIONS AND WARRANTIES...........................................................................................56

XIII. EXHIBITS................................................................................................................................................. 59

A.PRIM ASSET ALLOCATION & PUBLIC MARKETS INVESTMENT MANAGERS.......................................................60B. SAMPLE INVESTMENT MANAGEMENT AGREEMENT..........................................................................................64C. DISCLOSURE FORMS..................................................................................................................................... 111D.chapter 32 of the massachusetts general laws & Massachusetts conflict of interest

law……………………….116E.EXCEL PERFORMANCE SPREADSHEET............................................................................................................. 117

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Pension Reserves Investment Management Board

REQUEST FOR PROPOSALS


I. INTRODUCTION.

The Massachusetts Pension Reserves Investment Management (PRIM) Board is soliciting proposals from firms interested in providing U.S. Equity Portable Alpha Investment Management Services. The Board seeks to select firms to provide 1) beta overlay management services and 2) alpha generating hedge fund investment management services. More detailed descriptions of these services are set forth under the heading "SCOPE OF SERVICES".

II. BACKGROUND INFORMATION.

A. Legal Structure of PRIM.

The Pension Reserves Investment Management (PRIM) Board is charged with the responsibility of investing and reinvesting the assets of the Pension Reserves Investment Trust (PRIT) Fund. The PRIT Fund is a pooled investment fund consisting of the assets of the State Employees' and Teachers' Retirement Systems as well as assets of other public employee retirement systems in the Commonwealth of Massachusetts (referred to as participating and purchasing systems). The PRIT Fund's primary investment objective is to accumulate assets through investment earnings and other revenue sources to meet future pension liabilities. As of February 28, 2006, the PRIT Fund had assets of approximately $41.5 billion. PRIT funds are generally invested with a longer-term perspective and higher target returns than most retirement systems. The Fund was

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originally established to address the unfunded liability of the pension system. The Massachusetts State Teachers’ and Employees’ Retirement Systems Trust Fund (“MASTERS”) merged into the PRIT Fund as of December 31, 1996.

The nine-member PRIM Board is chaired by the State Treasurer and Receiver-General of the Commonwealth, Timothy P. Cahill. The Governor or his designee is also a member of the Board. Other members include appointees of both the Governor and Treasurer, and four representatives of State employees and teachers. All members serve without compensation.

The Board oversees the Fund under the terms of its Operating Trust dated July 15, 1988 and most recently amended on September 22, 1998. The members of the Board, in conjunction with the Executive Director, who serves at the pleasure of the Board, determine policies and make decisions concerning the administrative and investment operations of the Fund.

The PRIM Board has established advisory committees, Investment, Administration/Audit and Real Estate/Timber, to provide a broader range of input to the Board on an informal basis. These committees are generally comprised of two or three Board members and private citizens with investment or business expertise. PRIM's investment managers deal primarily with the staff and Investment Committee. All policies and investments are ultimately approved by the Board.

B. PRIM’s Advisors.

Outside advisors are engaged for their particular expertise and retained to assist the Board and its staff in the areas of General Portfolio Strategy and Investments, Real Estate, and Private Markets. Cliffwater LLC is PRIM's general consultant as well as the hedge fund consultant, Pathway Capital is the alternative investment consultant, and The Townsend Group and Morris & Morse provide real estate consulting services. KPMG is the Fund’s auditor. In addition, Deloitte & Touche audits the Real Estate and Timber portfolios. Mellon Trust is the Fund's custodian and is responsible for providing record-keeping and analytic performance valuations for the Fund.

C. General Description of PRIM’s Assets.

Exhibit A includes a description of PRIM’s asset allocation as of February 28, 2006.

D. Tobacco Divestiture

On October 7, 1997, the Massachusetts legislature enacted legislation, H. 3905 that forbids the PRIT Fund from purchasing securities “of any company which derives more than 15 per cent of its revenues from the sale of tobacco products.” The legislation also required the PRIT fund to divest itself of all such securities within three years; this divestment was largely completed before the end of 1997. PRIM provides investment managers with a quarterly listing of these restricted securities.

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III. SCOPE OF SERVICES.

In February, 2006, the PRIM Board approved a 5% (approximately $2 billion) allocation to U.S. Equity Portable Alpha. The purpose of this Request for Proposal is to select one or more firms to provide 1) beta overlay management services and 2) alpha generating hedge fund investment management services.

1) Beta OverlayPRIM will achieve the beta, either S&P 500 or Dow Jones Wilshire 5000, through a notional investment in futures and/or swap contracts. PRIM staff anticipates that 20% of the approximately $2 billion portfolio may be reserved for cash margins. The beta overlay provider may be a traditional beta overlay manager or a hedge fund of fund of funds with beta overlay capabilities, and may submit a proposal to manage only the beta overlay management services or both the beta overlay management and the alpha generating hedge fund investment management services. PRIM is seeking one beta overlay manager for the full $2 billion program.

2) Alpha SourcePRIM will achieve alpha by investing approximately $1.6 billion in a portfolio of hedge fund of funds and multi-strategy hedge fund managers. Over 60% of the alpha source will be deployed through hedge fund of funds managers, and up to 40% may be deployed through multi-strategy managers. The alpha generating hedge fund managers should produce alpha of LIBOR + 3%, net of fees, with volatility over the last five years less than 6% and a sharpe ratio greater than 1. PRIM’s goal via this search is to retain multiple alpha generating hedge fund of funds and multi-strategy managers and construct a well-diversified portfolio with conservative risk and return expectations that exhibit low correlations and low beta to the S&P 500. For the aggregate alpha component of the overall portable alpha program, expected returns are 6.85% , expected risk is 4.64%, and beta to the S&P 500 is less than .2.

PRIM’s objective in launching a U.S. Equity Portable Alpha program is to complement other asset classes in the portfolio and minimize potential volatility of the fund while continuing to maximize returns. Proposals submitted for other strategies will NOT be accepted.

PRIM may select investment advisers based on PRIM’s evaluation of the Proposals in accordance with the Selection Criteria contained in Section IX of this Request for Proposal. Investment advisers selected to perform these services will be required to perform the following additional services for PRIM: (1) submit monthly asset, transaction and performance statements within two weeks of each calendar month end; (2) attend semi-annual performance reviews in Boston, Massachusetts; and (3) participate in annual site visits. Currently, all funds of PRIM, including the funds to be managed in accordance with this RFP, are subject to these investment guidelines, as well as others whenever appropriate.

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IV. MANAGEMENT AGREEMENT.

PRIM will require that the manager or managers selected enter into its standard investment management agreement (the “Agreement”), including the appropriate investment guidelines and reporting requirements. A sample Beta Overlay Agreement and a Sample Hedge Fund Agreement are attached to this RFP as Exhibit B. Each firm responding to this RFP shall be required to state under the Representations and Warranties, set forth in Section XII hereof, that it will agree to and execute a contract containing the provisions set forth in Exhibit B.

V. PROPOSAL SPECIFICATIONS.

A. Proposal Deadline.

The completed proposal, which must include all attachments, must be delivered electronically via e-mail to [email protected] by 3:00 p.m. EDT on Wednesday, May 17, 2006 (the “Proposal Deadline”) to PRIM. Any Proposal delivered after the Proposal Deadline will not be considered.

In addition, an original and one copy of the Proposal should be sent to PRIM as listed below:

Amy Prehn FinkelsteinInvestment Officer

Pension Reserves Investment Management Board84 State Street, Suite 250

Boston, Massachusetts 02109

In addition, please send via e-mail your proposal to [email protected] and send one hard copy to the following representative of PRIM’s hedge fund consultant:

Kathleen BarchickManaging Director

Cliffwater LLCMarina Towers

4640 Admiralty Way, Suite 1101Marina del Rey, CA 90292

The questions and/or requests made in this RFP should be duplicated in their entirety in the Proposal with each question and/or request repeated before the answer or response.

Copies of this RFP can be obtained electronically through the PRIM Board website at www.mapension.com.

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http://www.mapension.com/

mailto:[email protected]

B. Required Attachments and Enclosures.

In addition to the responses to the RFP questions, the following information will be attached to the firm’s response.

1. Cover Letter. The Proposal must be accompanied by an original and one (1) copy (one unbound) of a cover letter and one copy sent via e-mail, which will be considered an integral part of the Proposal, and which shall be signed by at least one individual who is authorized to bind the firm contractually. This cover letter must include: (a) the firm name, address and telephone/fax numbers; (b) the client contact; (c) the title or position which the signer of the cover letter holds in the firm; and (d) a statement to the effect that the Proposal is a firm and irrevocable offer of the firm.

2. Representations and Warranties. The Warranties contained in Section XII hereof, signed by an authorized officer of the firm, must be included as an attachment to the cover letter referenced in (1) above. YOUR SIGNATURE IS CONSIDERED BINDING, AND A SIGNED REPRESENTATIONS AND WARRANTIES MUST ACCOMPANY YOUR SUBMISSION OR IT MAY NOT BE PROCESSED.

3. Disclosure Statement. Attached to this RFP as Exhibit C are two Disclosure Statements, one for PRIM and one for PERAC. Each firm submitting a Proposal must complete the two disclosure forms and submit as an attachment to the cover letter referenced in (1) above. YOU MUST COMPLETE BOTH PRIM AND PERAC DISCLOSURE FORMS OR YOUR SUBMISSION MAY NOT BE PROCESSED.

4. Fee Proposal. The original and one copy of the fee proposals (one copy must be unbound and ready to photocopy) and one copy sent via e-mail of the proposing firm, on the forms contained in Section XI hereof (the “Fee Proposals”) must be placed in a separate, sealed envelope, clearly identified on the outside as “Fee Proposal submitted by (COMPANY NAME).” Also include one copy to Cliffwater LLC.

3. Any additional material must be submitted separate from the response.

C. Public Record.

In accordance with Chapter 66, Section 10 and Chapter 4 of the Massachusetts General Laws, upon the expiration of the Proposal Deadline, all Proposals shall be deemed a public record and shall be subject to requests for public disclosure. However, please note Section 23 of chapter 32 of the General Laws as most recently amended by Section 3 of chapter 502 of the Acts of 2002, was recently further amended by adding after subdivision (5), the following subdivision:

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(6) Confidentiality of certain records. Any documentary material or data made or received by any person of the state investment (PRIM) board, which consists of trade secrets or commercial or financial information that relates to the investment of public trust or retirement funds, shall not be disclosed to the public if disclosure is likely to impair the government's ability to obtain such information in the future or is likely to cause substantial harm to the competitive position of the person or entity from whom the information was obtained. The provisions of the open meeting law shall not apply to the PRIM Board when it is discussing the information described in this paragraph. This subdivision shall apply to any request for information covered by this subdivision for which no disclosure has been made by the effective date of this subdivision.

D. Withdrawal/Irrevocability of Responses.

A proposer may withdraw and resubmit a Proposal prior to the Proposal Deadline. No withdrawals or re-submissions will be allowed after the Proposal Deadline.

E. Waiver/Cure of Minor Informalities, Errors and Omissions.

PRIM reserves the right to waive or permit cure of minor informalities, errors or omissions prior to the selection of finalists, and to conduct discussions with any qualified proposers and to take any other measures with respect to this RFP in any manner necessary to serve the best interest of PRIM and its beneficiaries.

F. Communications with PRIM.

PRIM’s Procurement Officer for this RFP is:

Ms. Amy Prehn FinkelsteinInvestment Officer

Pension Reserves Investment Management Board84 State Street, Suite 250

Boston, Massachusetts 02109Telephone: (617) 946-8454Facsimile: (617) 946-8475

[email protected]

As of April 17, 2006, firms which intend to submit a Proposal should not contact any PRIM staff, members of the Investment Committee, members of the PRIM Board, or employees of the Massachusetts Treasury, other than the Procurement Officer. An exception to this rule applies to firms which currently do business with PRIM, such as PRIM’s current investment managers, but any contact made by such firms with persons other than the Procurement Officer must be limited to that business, and must not relate

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to this RFP. In addition, firms which intend to submit a Proposal should not discuss this RFP with any employee of PRIM’s custodian, other PRIM managers, consultants, or PRIM’s legal counsel or other advisors.

FAILURE TO OBSERVE THIS RULE IS GROUNDS FOR DISQUALIFICATION.

G. Questions Relating to this RFP.

All questions concerning this RFP must be received by the Procurement Officer by 3:00 p.m. EDT on Friday, May 5, 2006 (the "Question Deadline) via e-mail. Questions received in accordance with this section will be answered and circulated by e-mail to all firms who have proposed a question or who request in writing a copy of the questions and the responses. Questions submitted after the Question Deadline will not be considered.

H. Incurring Costs.

PRIM will not be liable for any costs incurred prior to entering into the Contract with the successful proposer or proposers.

I. Rejection of Proposals.

PRIM reserves the right to reject any non-qualifying Proposal, as well as the right to reject all Proposals submitted under this request for proposal.

VI. SELECTION PROCESS.

The Selection Process under this RFP will be as follows:

A. Non-Qualifying Proposals.

PRIM will evaluate each Proposal to determine if it was submitted in accordance with the requirements set forth in this RFP, including whether the proposing firm meets the minimum criteria. All non-qualifying Proposals not subject to the waiver/ cure of minor information will be rejected at this time and the proposing firm so notified.

B. Selection of Finalists.

The Proposals will be evaluated by a Search Committee to be formed by the PRIM Board. It is anticipated that the Search Committee shall include a member of the Investment Committee or its representative, as well as PRIM staff. Proposers may be invited to a due diligence interview with the Search Committee. Based on the Selection Criteria set forth in Section IX of this RFP (including the Fee Proposals), the Search

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Committee will select finalists to serve as investment manager to PRIM.

C. Selection of Investment Managers.

A member of the Search Committee may make a due diligence site visit to the finalists' offices. The Search Committee shall then rank the finalists and make its recommendations for selecting an investment manager to the PRIM Investment Committee and the PRIM Board.

The finalists selected by the Search Committee may be required to make an oral presentation to the Investment Committee, the PRIM Board, or both. The Investment Committee may accept the recommendations of the Search Committee or, based on the Selection Criteria set forth in Section IX of this RFP, may rank the firms differently from the Search Committee and recommend another firm or firms to provide investment management services to PRIM. The engagement will be awarded by the PRIM Board.

VII. TENTATIVE TIME TABLE.

The following is the tentative time schedule for PRIM’s search for firms to provide investment management services. All dates are subject to modification by PRIM with notice.

Issuance of RFP: April 17, 2006

RFP Question Deadline: May 5, 2006(Firm) 3:00 p.m. EDT

RFP Response Deadline: May 17, 2006(Firm) 3:00 p.m. EDT

Notification of Finalists: Week of June 5, 2006(Tentative)

Search Committee June 14, 2006 and June 15, 2006Interviews**: (Tentative)

Investment Committee July 18, 2006Interviews**: (Tentative)

PRIM Board Meeting**: August 3, 2006(Tentative)

Projected September 1, 2006Commencement Date:

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** If selected, please plan to be in Boston for interviews by the Search Committee, Investment Committee, and the Board on these specific dates.

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VIII. MINIMUM CRITERIA.

A Proposer must meet the following minimum qualifications to be given further consideration in PRIM’s search for an investment manager(s). Failure of a firm to meet the minimum qualifications applicable to the investment management services for which it is submitting a Proposal will result in the Proposal’s immediate rejection.

Section A is to be completed by firms submitting a response for the Beta Overlay Management Services. Section B is to be completed by firms submitting a response for the Alpha Generating Hedge Fund Investment Management Services. If firms are responding to both services, both sections should be completed.

A. Basic Minimum Qualifications: Beta Overlay Management Services

All firms must meet the minimum criteria below:

1. The investment professionals must have at least a two-year performance history in the beta overlay strategy being proposed as of March 31, 2006.

2. The investment professionals whose performance history is submitted must be the team responsible for the management of this account.

3. The candidate must be responsible for managing at least $500 million in the beta overlay strategy being proposed as of March 31, 2006.

4. The candidate must be willing to act as a fiduciary as defined by Chapter 32 of the Massachusetts General Laws. If the candidate is SEC registered, the firm must submit its full Form ADV (Parts I and II).

5. The candidate firm must have at least one tax-exempt institutional client invested in the beta overlay strategy being proposed, as of March 31, 2006.

6. The candidate must have been in operation as an investment management organization for at least six months as of March 31, 2006.

7. The candidate must be willing to include the attached representations and warranties in the contract if selected as the manager to the PRIM Board.

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B. Basic Minimum Qualifications: Alpha Generating Hedge Fund Investment Management Services.


1. The investment professionals must have at least a two-year performance history in the alpha strategy being proposed as of March 31, 2006.


3. The candidate must be responsible for managing at least $300 million in the alpha strategy being proposed as of March 31, 2006.


5. The candidate firm must have at least one tax-exempt institutional client invested in the alpha strategy being proposed, as of March 31, 2006.



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IX. SELECTION CRITERIA.

PRIM will apply the following criteria in the selection of an investment manager(s) for both the beta overlay management and alpha generating hedge fund investment management services. The Search Committee will assign a rating of either "Highly Advantageous", "Advantageous", "Acceptable", "Not Advantageous" or "Unacceptable" to all qualifying Proposals in each of the categories listed below. Any Proposal receiving a rating of "Unacceptable" in any applicable category will not be considered further. Using these ratings as a guide, the Search Committee will select finalists to move to the next stage of the Selection Process and recommend the retention of an investment manager to the Investment Committee. For a more detailed description of the Selection Process, see Section VI hereof.

A. Basic Selection Criteria Applicable to all Proposing Firms

1. Stability and General Experience of the Firm.

a. Stability of the firm, as measured by the quality of the organizational structure of the firm; the existence of, or potential for, significant developments in the firm; and the expected financial stability of the firm.

b. Experience of the firm in providing investment management services to similar institutional investors, as measured by the firm's history of providing such services; and the similarity of a firm's clients to PRIM.

c. Adverse organizational issues, such as the existence of litigation or other investigations; and the existence of financial problems.

2. Quality, Stability, Depth and Experience of Personnel.

a. Experience of portfolio manager(s) in providing similar services to similar institutional investors, as measured by the length of time the portfolio manager(s) has served as a portfolio manager to such investors; demonstrated expertise in providing such services to other such investors; demonstrated organizational skills, and demonstrated ability to interact with both the staff and oversight body of pension funds.

b. Experience of professionals in providing investment management services as measured by the length of time dedicated support staff have provided such services to similar institutional investors.

c. Depth of personnel, as measured by the firm's account/portfolio manager and account/investment management personnel ratios; and back-up procedures for providing services to PRIM in the absence of the portfolio manager(s).

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d. Stability of the firm's professional base, as measured by personnel turnover since March 31, 2003.

3. Client Relations and References

a. Stability of the firm's client base, as measured by the number of accounts gained or lost since March 31, 2003.

b. Quality of references from clients, as measured by responses relating to quality and responsiveness of investment management services; knowledge and accessibility of the portfolio manager(s); and the quality of client services.

4. Philosophy/Process

a. Philosophy and portfolio characteristics that are consistent with the overall structural objectives of the asset class as measured by the investment characteristics of the portfolio, and that appropriately complement the existing PRIM portfolio.

b. Defined philosophy and consistent process implementation, as measured by return consistency, distinct buy/sell disciplines, portfolio construction methodology, and the implementation of risk controls.

5. Performance and Fees

a. The total cost of performing investment advisory services as measured by the Fee Proposal.

b. The historical performance of the product as measured by its cumulative and annual performance compared to appropriate benchmarks as appropriate for a manager’s style over multiple time periods.

c. Fit with PRIM’s objective to complement other asset classes in the portfolio and minimize potential volatility of the fund while maximizing returns.

X. QUESTIONNAIRE

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PRODUCT NAME:

PRODUCT TYPE (please check all that apply)

Beta Overlay Provider _________

Alpha Generating Hedge Fund Provider _________Hedge Fund of Funds _________Multi-Strategy Hedge Fund _________

FIRM NAME:

ADDRESS:

TELEPHONE #:

FACSIMILE #:

E-MAIL ADDRESS:

CLIENT CONTACT:

SIGNED:

Name (print):

Title:

Date:

SECTION I: BETA OVERLAY MANAGEMENT SERVICES

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Please fill out this section if you wish to submit a proposal for the beta overlay management services or if you are submitting a combined proposal for both services.

Please note that “subject product” refers to the specific U.S. Equity Beta Overlay product that is being proposed.

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A. COMPANY BACKGROUND AND GENERAL DESCRIPTION

1. Indicate your firm’s fiduciary classification:

Bank Insurance Company Registered Investment Advisor

(Investment Advisors Act of 1940) Affiliate of Fiduciary

(Name and Classification): Other:

2. Give a brief history of the firm including the month and year of SEC 1940 Act registration, the month and year the firm began managing U.S. equity beta overlay assets, and the month and year the firm began managing U.S. equity beta overlay assets for U.S. tax-exempt clients.

3. Describe the ownership of the firm, including but not limited to ownership structure and affiliated companies or joint ventures. If the firm is an affiliate, designate percent of parent firm’s total revenue generated by your organization, if a joint venture partner, identify the percentage of ownership and revenues recognized by each partner to the combined association.

4. Provide an organizational chart diagramming the relationships between the professional staff as well as the parent-subsidiary, affiliate, or joint venture entities.

5. Describe the levels (U.S. dollar amounts) of coverage for SEC-required (17g-1) fidelity bonds, errors and omissions coverage and any other fiduciary coverage, which your firm carries. List the insurance carriers supplying the coverage.

6. Over the past five years, has your organization or any of its affiliates or parent, or any officer or principal been involved in any business litigation, regulatory or legal proceedings? If so, provide a detailed explanation and indicate the current status. Also provide complete Form ADV (Parts I and II).

7. Describe in detail any potential conflicts of interest your firm may have in the management of this account. Include any activities of affiliated or parent organizations, brokerage activities, investment banking activities, or any past or current relationships with PRIM Board members and investment staff. Include any other pertinent activities, actions, or relationships not specifically outlined in this question. Also disclose any business relationship with Cliffwater LLC.

8. Describe all outside marketing/sales services (including product design and development) for which your firm has contracted over the last three years for the marketing of your investment services to the institutional, tax-exempt market.

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Specify any such arrangements as they relate to the product being proposed. Indicate whether the fees paid for such services are charged to client portfolio assets.

9. Describe the material developments in your organization (changes in ownership, personnel, business, etc.) over the past three years in detail.

10. Do you have a plan and arrangements in place for an alternative worksite should your facilities become inoperative because of fire, earthquake, etc. Describe.

11. Describe your firm’s overall business strengths, weaknesses and uniqueness.

B. NOTIONAL ASSETS UNDER MANAGEMENT

12/31 12/31 12/31 12/31 12/31 3/312001 2002 2003 2004 2005 2006

1(a) Total assets under management (all products) ($millions)

(b) Total institutional (taxable & non-taxable) assets in beta overlay products ($ millions)

(c) Total institutional (taxable & non-taxable) assets in U.S. Equity beta overlay ($ millions)

(d) Total assets managed in U.S. Equity beta overlay for U.S. tax-exempt clients in separate accounts ($ millions)

Number of Separate Accounts

2. Please list 5 largest U.S. tax-exempt U.S. Equity beta overlay accounts currently managed, including all public and ERISA fund clients, invested in the subject product. Include Name, Date of Inception, Market Value, Average Overlay Position, and Aggregate Underlying Portfolio Asset Value, as of 3/31/06.

3. List all clients and asset amounts gained in the subject product over the past three years as of March 31, 2006.

4. List all clients and asset amounts lost in the subject product over the past three years as of March 31, 2006.

5. What is the minimum account size you will accept on a separate account basis?

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6. Identify three clients that have terminated accounts in the subject product over the past three years that can be contacted as references. Provide the firm name, contact person and title, phone number, product name, fund account value and reason for termination.

7. Provide the client name, address, phone number, contact name, title, and account type (e.g. defined benefit, defined contribution, endowment) of three accounts, who are invested in the subject product that can be contacted as references. Also indicate the length of your relationship and assets under management for each reference.

C. PEOPLE/ORGANIZATION

1. List the total number of persons in the subject product employed by discipline.

TotalPortfolio Managers Research Analysts Economists Marketing Trading Administration Client Service Other (Specify)

Total

2. Please specify locations of portfolio managers and state the number of accounts each manages and include the dollar value of assets under management. Indicate those associated with U.S. tax-exempt accounts.

3. Provide a list of the professionals involved in the subject product in the manner listed below:

PORTFOLIO MANAGEMENT

NameTitle/

ResponsibilitiesYrsExp

Yrs @Firm

Degrees/Designations

SponsoringBody/School

RESEARCHTitle/ Yrs Yrs @ Degrees/ Sponsoring

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Name Responsibilities Exp Firm Designations Body/School

TRADING

NameTitle/


Yrs @Firm



4. What personnel or organizational improvements are planned over the next years?

5. Provide biographies of no longer than one page on each of the persons listed in Question C.2. Please include prior employment history.

6. Provide a firm wide organizational chart. Also provide an organizational chart that diagrams the different functions (research, trading, etc.) dedicated to the product area. Professionals should be identified over their areas of responsibility.

7. Describe the compensation and incentive program for professionals directly involved in the product. How are they evaluated and rewarded? What incentives are provided to attract and retain superior individuals?

Identify the percentage of compensation which is: Base salary Performance bonus Equity incentives Other

Do you offer direct ownership, phantom stock, profit sharing, and/or performance bonus?

Who is eligible to participate? On what basis are these incentives determined – is compensation tied to success factors

such as asset growth, performance, or other factors? Please list and indicate the weight of each in determining total compensation.

How does your compensation structure/levels compare with other firms in the industry?

8. Discuss the causes and impact of any turnover (departures or hiring/promotions) of any professionals directly involved in the product you have experienced in the past five years. How long has the team been together? Indicate when and why any professional dedicated to the product left or joined the firm in the past three years. What were/are their job responsibilities? For personnel who have left indicate job titles and years with the firm and who replaced them.

JOINEDDate Name/Title Responsibilities

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DEPARTED

Date Name/Title ResponsibilitiesYrs @ Firm Reason for

leaving

Replaced by(name/title)

D. INVESTMENT PHILOSOPHY, POLICY AND PROCESS

1. Describe your firm’s investment philosophy and process for beta overlay management. Why do you believe this philosophy will be successful in the future? Provide any evidence or research, which supports this belief.

2. Describe the history/evolution of your beta overlay services and discuss any changes in strategy, structure, etc.

3. Discuss the important factors to consider when evaluating beta overlay management and how your implementation improves fund performance and efficiency.

4. List the various strategies/benchmarks that you are capable of managing.

5. Explain your methodology for replication of U.S. Equity indices. Specifically, how do you gain exposure to the S&P 500 index? What are the allowable tolerance ranges? How do you gain exposure to the Dow Jones Wilshire 5000 index? What are the allowable tolerance ranges? What are the advantages/disadvantages of each approach?

6. Describe your proposed solution based on your understanding of PRIM’s program as outlined under Scope of Services. Do you recommend that PRIM gain index exposure through the S&P 500 or the Dow Jones Wilshire 5000? Do you recommend using futures and/or swaps to gain U.S. equity beta exposure? In what ratio? Why? What are the associated costs of each? Please include entry costs, annual holding costs, total cost of long position over 1 year, and expected annual tracking error.

7. If you recommend utilizing futures, please discuss how the use of such instruments is consistent with your approach, the advantages, potential risks, risk controls, and your expertise with these instruments. Please specifically address roll and basis risk due to tracking error. How do you mitigate these risks? How do you determine when to roll the contracts? How do you monitor that you are

23

optimizing the roll? What are the capital requirements associated with this approach? What is the expected tracking error?

8. If you recommend utilizing swaps, please discuss how the use of such instruments is consistent with your approach, the advantages, potential risks, risk controls, and your expertise with these instruments. Please specifically address associated risks such as liquidity and counterparty risks as well as how you mitigate these risks. What type of settlement do you recommend (monthly, quarterly, annual)? Why? Do you recommend implementing intra-month triggers?

9. How do you minimize tracking error? What do you expect the tracking error to be? How much is due to costs of derivatives and how much is due to benchmark mismatch?

10. What percentage of the program should be reserved for cash margins? Why? Is PRIM’s target of 20% reasonable? How would both initial and variation margin requirements be handled? Please describe in detail.

11. Please define your firm’s role in the broader context of the portable alpha program. How would your firm interact with PRIM’s alpha generating managers, consultant, custodian, and staff? What is your infrastructure to manage and monitor the exposure? What do you believe are the biggest challenges in facilitating this process?

12. Please describe how you would facilitate the rebalancing process. What type of transparency and information do you need from the alpha managers? Specifically, describe how you:

Provide ongoing beta exposure commensurate with total asset size of the portable alpha mandate

Adjust exposure based on performance of alpha managers relative to LIBOR Monitor and neutralize undesired market exposure in the alpha program Facilitate rebalancing between managers according to target ratios Manage cash flows

13. Specify the approach you would use to measure and monitor the performance of the overlay program and impact on the overall portable alpha program. What type of return information and performance attribution will you provide on the total portable alpha portfolio? How would you expect to coordinate with the alpha generating hedge funds to ensure that overlay performance is properly reflected?

14. Describe your firm’s trading capabilities related to this product and specifically as it relates to futures and swaps. Provide a description of your trading platform, including systems (proprietary and off-the-shelf) for execution and processing.

24

15. Is your firm in a position where it may be on the other side of any given transaction? If so, what safeguards can you provide to ensure you are providing the best price to a client’s account? Please list any conflicts this activity creates and how your firm manages those conflicts.

16. How are you compensated for your activities in this area? How transparent is this compensation? Are commissions fully disclosed? Do you participate in the spread on any transactions? Do you have any arrangements with other funds or firms whereby you are compensated by trading with those firms?

17. Please list the various types and levels of costs associated (both implicit and explicit) with this type of trading.

18. What brokerage/counterparty requirements are required for this service? Which firms would be utilized and how would they be selected? What is your role in preparing appropriate documentation such as ISDA Agreements?

19. If you have soft dollar relationships with broker-dealers/counterparties, please disclose the following: soft dollar policy and when last reviewed, percentage of trades executed tied to soft dollar relationships, and list of resources funded by soft dollars that would normally be funded with hard dollars.

20. Are you able to provide accurate, audited asset and transaction statements within 2-3 weeks of month's end? Explain.

21. What type of reporting do you provide around exposures and performance?

22. Describe the details of the process in establishing an overlay program, including a sample timeline.

23. What unique attributes does your firm or your product have that distinguish it from its competitors in the fulfillment of this assignment? What unique features of your investment approach do you feel add the most value over time?

E. BACK-OFFICE/OPERATIONS/INTERNAL CONTROLS

1. How many back office operations professionals support the subject product? Please specify locations.


BACK OFFICE OPERATIONS

NameTitle/


Yrs @Firm



25

3. Provide biographies of no longer than one page on each of the persons listed in Question 2. Please include prior employment history.

4. Provide an organizational chart that diagrams the different operations functions dedicated to the product area. Professionals should be identified over their areas of responsibility.

5. Discuss the causes and impact of any turnover (departures or hiring/promotions) of any operations professionals directly involved in the product you have experienced in the past five years. How long has the team been together? Indicate when and why any operations professional dedicated to the product left or joined the firm in the past three years. What were/are their job responsibilities? For personnel who have left indicate job titles and years with the firm and who replaced them.


DEPARTED


leaving


4. Provide a detailed summary of your firm’s internal control structure. Does the firm conduct periodic risk assessment? Provide a copy of SAS 70 if available, or other internal control review documentation, preferably prepared by an independent third party.

5. Provide copies of the firm’s most recent audited financial statements and auditor’s management letter.

6. Describe the following back office and operational processes: Are any back-office operations outsourced? If outsourced, what are the details of

the agreement, including the economics of the relationship? Does the firm have an existing relationship with PRIM’s custodian bank? How does

PRIM’s custodian compare to others? How often are investment positions and cash reconciled with custodians?

26

Are trading policies and procedures for all investment strategies adequately documented? What type of trading system is utilized? Is the system proprietary or commercial?

How much price discretion do traders have? How are trades allocated among accounts? At what point are trades allocated? How are executed trades communicated to the portfolio accounting system? Is the information automatically transmitted? How do you ensure all trade information is captured? Describe internal controls in place designed to limit potentially harmful activities of your firm’s traders and other investment professionals.

Discuss how the securities in your portfolio are valued. Is a Pricing Group employed that is separate and district from the investment

management and operations functions? Are pricing policies and valuation procedures documented and current?

F. COMPLIANCE/REGULATORY

1. How many compliance professionals support the subject product? Please specify locations.


COMPLIANCE

NameTitle/


Yrs @Firm




4. Provide a detailed summary of your firm’s compliance regime. Has the firm established written policies and procedures in accordance with SEC Rule 206(4)-7? Has the firm developed a process for evaluating the adequacy and effectiveness of these policies and procedures? How often are they reviewed for adequacy and effectiveness? How often are compliance policies and procedures updated?

5. Does your firm have a designated Chief Compliance Officer in accordance with SEC Rule 206 (4)-7? Describe the Chief Compliance Officer’s role in the firm.

6. Does your firm maintain a code of ethics? If so, please attach.

7. During the past five years, has the firm been subject to any governmental regulatory or law enforcement agency’s investigation, examination, or other proceeding directly involving the firm, its owners, or employees other than such examination or other proceedings as are routinely conducted in the ordinary course of the firm’s business?

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8. During the past five years, has the firm been subject to any litigation alleging fraud, breach of fiduciary duty, or other willful misconduct?

9. Has your firm ever had any compliance violations or client guideline violations? If so, please describe how violations were dealt with and resolved.

G. PERFORMANCE (Simulated results are not acceptable.)

1. a. Provide annual performance on a total return basis GROSS OF ALL FEES AND MANAGEMENT COSTS from inception for the subject product. Indicate if returns are net or gross of custody and swap costs. Use AIMR standards or, if different, indicate explicitly how they differ. Indicate whether the subject performance is the composite performance or that of the commingled account vehicle. Please complete the both tables below. YOU MUST COMPLETE THE 2 TABLES BELOW OR YOUR SUBMISSION MAY NOT BE PROCESSED. IN ADDITION, PLEASE ENTER THIS INFORMATION IN THE EXCEL SPREADSHEET (EXHIBIT E, TAB 1 and TAB 2-Quarterly and Monthly Performance) AND SUBMIT IT WITH YOUR RESPONSE. PLEASE DO NOT CHANGE THE SPREADSHEET FORMAT.

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TABLE#1

Beta Overlay Management

2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995

Month 1

Month 2

Month 3

Month 4 N/A

Month 5 N/A

Month 6 N/A

Month 7 N/A

Month 8 N/A

Month 9 N/A

Month 10 N/A

Month 11 N/A

Month 12 N/A

Total Return ___%___%___%___%___%___%___%___%___%___%___%___%

S&P 500 Index or

DJ Wilshire 5000 ___%___%___%___%___%___%___%___%___%___%___%___%

Difference ___%___%___%___%___%___%___%___%___%___%___%___%

TABLE #21 Year 3 Years 5 Years 10 Years

Annualized Ended Ended Ended EndedReturns 3/31/06 3/31/06 3/31/06 3/31/06

Return _______% _______% _______% _______%

S&P 500 Index orDJ Wilshire5000 _______% _______% _______% _______%

Difference _______% _______% _______% _______%

29

Provide underlying data for performance given in question F1(a), if applicable:

2006 2005 2004 2003 2002 2001 2000 1999

Assets in CompositeNumber of AcctsHigh ReturnMedian ReturnLow Return

2. a. Describe causes for investment return deviation (both positive and negative) from the stated benchmark return by calendar year. In the attribution analysis identify contributions of stock and sector selection.

H. CLIENT SERVICE

1. Which of your firm’s offices would service this account? What services would specifically be provided by which office?

2. Who will be the client service officer? How often could the person be available for client meetings? How often could the portfolio manager, chief investment officer and/or firm president be available for client meetings?

I. SAMPLE DOCUMENTATION

Please submit samples of appropriate documentation (eg. Investment agreement, guidelines, prospectus) required to implement the recommended structure.

J. EXECUTIVE SUMMARY.

Please submit an executive summary consisting of not more than 3 one-sided pages which summarizes the contents of the Proposal with the firm’s name identified on the top of the first page. If the firm is selected for a finalist interview, this summary will be provided to the Investment Committee in advance of any interview. Please be aware that all members of the Investment Committee may not have read your complete Proposal, which will be evaluated by the Search Committee.

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SECTION II: ALPHA GENERATING HEDGE FUNDS (FUND OF FUNDS AND MULTI-STRATEGY MANAGERS)

Please fill out this section if you wish to submit a proposal for the alpha generating hedge fund investment management services.

1) Please note that “hedge funds” refers to either fund of funds or multi-strategy funds, whichever is appropriate. “Subject product” refers to the specific alpha-generating fund of funds or multi-strategy product being proposed.

2) Based upon Section III, Scope of Services, below please provide a brief description of the hedge fund product you are proposing. Please explain if you are recommending a separate account or a commingled account.

3) Please answer all of the questions in the RFP as they relate to the specific portfolio that you are recommending.

4) Please include the following documents with your RFP submission:A. Subscription DocumentsB. Offering MemorandumC. Limited Partnership Agreements

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A. COMPANY BACKGROUND AND GENERAL DESCRIPTION

1. Indicate your firm’s fiduciary classification:

Bank Insurance Company Registered Investment Advisor/

(Investment Advisors Act of 1940) Affiliate of Fiduciary

(Name and Classification): Other:

2. Give a brief history of the firm including dates and types of registration with any regulatory agencies (1940 Act Registration, IMRO, etc).

3. Provide background about the month and year the firm began managing hedge funds, and the month and year the firm began managing hedge funds for U.S. tax-exempt clients.

4. Provide background on proposed subject product including inception date (month and year), fund structure, legal entity, domicile, fund status for U.S. Investors, and fund status for Offshore Investors.

5. Describe the ownership of the firm, including but not limited to ownership structure and affiliated companies or joint ventures. If the firm is an affiliate, designate percent of parent firm’s total revenue generated by your organization, if a joint venture partner, identify the percentage of ownership and revenues recognized by each partner to the combined association. If your firm is employee-owned, discuss how the equity is distributed, and what, if any, plans your firm has to further distribute equity to your key professionals.

6. Provide an organizational chart diagramming the relationships between the professional staff as well as the parent-subsidiary, affiliate, or joint venture entities.

7. Describe the levels (U.S. dollar amounts) of coverage for SEC-required (17g-1) fidelity bonds, errors and omissions coverage and any other fiduciary coverage, which your firm carries. List the insurance carriers supplying the coverage.

8. Over the past five years, has your organization or any of its affiliates or parent, or any officer or principal been involved in any business litigation, regulatory or legal proceedings? If so, provide a detailed explanation and indicate the current status. Also provide complete Form ADV (Parts I and II).

9. Describe in detail any potential conflicts of interest your firm may have in the management of this account. Include any activities of affiliated or parent organizations

32

with insurance, mutual funds, brokerage activities, investment banking activities, or current relationships with PRIM Board members and investment staff. Include any other pertinent activities, actions, or relationships not specifically outlined in this question. Also disclose any business relationship with Cliffwater LLC.

10. Describe all outside marketing/sales services (including product design and development) for which your firm has contracted over the last three years for the marketing of your investment services to the institutional, tax-exempt market. Specify any such arrangements as they relate to the product being proposed. Indicate whether the fees paid for such services are charged to client portfolio assets.

11. Describe the material developments in your organization (changes in ownership, personnel, business, etc.) over the past three years in detail.

12. Will PRIM’s assets be treated as plan assets per the ERISA definition? If so, how is this monitored and how do you ensure compliance with current rules? If not, how is this managed?

13. Is the Fund permitted to generate unrelated business taxable income (“UBTI”) as described in Section 512 of the Internal Revenue Code of 1986, as amended? If so, indicate how much UBTI has been generated in each of the last five (5) fiscal years of the Fund.

14. Identify and describe the relationship and duration of the relationship with any of the following professionals used for your firm:

Prime Broker Custodian Administrator Auditor Accountant Attorney External Risk Manager

15. Please detail the proxy voting rights of clients, if any.

16. Do you have a plan and arrangements in place for an alternative worksite should your facilities become inoperative because of fire, earthquake, etc. Describe.

17. Describe your firm’s overall business strengths, weaknesses and uniqueness.

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B. ASSETS UNDER MANAGEMENT

12/31 12/31 12/31 12/31 12/31 3/312001 2002 2003 2004 2005 2006

1. (a) Total assets under management (all products) ($millions)

(b) Total institutional (taxable & non-taxable) assets in hedge fund products ($ millions)

(c) Total institutional (taxable & non-taxable) assets in proposed subject product ($ millions)

(d) Total assets managed in the proposed subject product for U.S. tax-exempt clients in separate accounts ($ millions)

Number of Separate Accounts Number of Commingled Accounts

2. Please list 5 largest U.S. tax-exempt accounts currently managed in the subject product, including all public and ERISA fund clients, invested in the subject product. Include Name, Date of Inception, and Market Value as of 3/31/06.

3. List all clients and asset amounts gained in the subject product over the past three years as of March 31, 2006.

4. List all clients and asset amounts lost in the subject product over the past three years as of March 31, 2006.

5. What is the minimum account size you will accept on a separate account basis?

6. Describe your ability to provide customized portfolios to investors. Do you recommend that PRIM invest in a separate account or commingled account? Why? Include information on the commingled fund such as guidelines and operational parameters such as dates of openings, liquidity, etc.

7. Identify three clients that have terminated accounts in the subject product over the past three years that can be contacted as references. Provide the firm name, contact person and title, phone number, product name, fund account value and reason for termination.

34

8. Provide the client name, address, phone number, contact name, title, and account type (e.g. defined benefit, defined contribution, endowment) of three accounts, who are invested in the subject product that can be contacted as references. Also indicate the length of your relationship and assets under management for each reference.

9. Describe the objectives of your firm with respect to future growth in the product, commenting on:

Maximum capacity, projected timeframe to reach capacity. How did you arrive at those asset limits?

Additional resources for portfolio management, research, trading, client service and tools/models to enhance the investment process or manage growth; and,

How will back office operations be affected in the event of a significant increase in assets under management? What actions will be taken?

10. What were the largest withdrawals in your fund since inception? Provide the date, percentage of equity, and reasons.

11. What is the optimum total asset size and number of client accounts for this investment product? Why? At what total asset size for the subject product do you intend to cease accepting more business? What advantages and disadvantages does your current size present to achieving superior performance results in the future.

C. PEOPLE/ORGANIZATION

1. How many people are employed by the firm? List the total number of persons in the subject product employed by discipline.

TotalPortfolio Managers Research Analysts Economists Marketing Trading Administration Client Service Legal _______Systems _______Other (Specify)

Total Investment Staff Total Non-Investment Staff Total Staff _______

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2. Please provide a list of all your investment offices, describing their functions. Identify where primary trading, research, and portfolio management activities take place. Where are accounts maintained?

3. Please specify locations of portfolio managers and state the number of accounts each manages and include the dollar value of assets under management. Indicate those associated with U.S. tax-exempt accounts.


PORTFOLIO MANAGEMENT

NameTitle/


Yrs @Firm



RESEARCH

NameTitle/


Yrs @Firm



TRADING

NameTitle/


Yrs @Firm



5. What personnel or organizational improvements are planned over the next years?

6. Provide biographies of no longer than one page on each of the persons listed in Question C.2. Please include prior employment history.

7. Provide a firm wide organizational chart. Also provide an organizational chart that diagrams the different functions (research, trading, etc.) dedicated to the product area. Professionals should be identified over their areas of responsibility.

8. Describe the compensation and incentive program for professionals directly involved in the product. How are they evaluated and rewarded? What incentives are provided to attract and retain superior individuals?

Identify the percentage of compensation which is: Base salary Performance bonus Equity incentives

36

Other Do you offer direct ownership, phantom stock, profit sharing, and/or performance

bonus? Who is eligible to participate? On what basis are these incentives determined – is compensation tied to success factors

such as asset growth, performance, or other factors? Please list and indicate the weight of each in determining total compensation.

How does your compensation structure/levels compare with other firms in the industry? Does your firm or key principles have a non-compete with any other firms? Explain.

9. What is the dollar amount and percent of the fund that is invested by the General Partner? Discuss the total amount invested by the principles/management in the fund and other investment vehicles managed pari passu with the subject product. Has the management reduced its personal investment? If so, provide date, amount, and reasons. Please also disclose conditions of subscription/redemptions of team and owners’ assets.

10. What percentage of the General Partner’s time will be spent managing the fund’s investments? Describe any succession plan you have in the event that the General Partner is no longer capable of carrying out its responsibilities. Discuss any key man provisions.

11. Discuss the causes and impact of any turnover (departures or hiring/promotions) of any professionals directly involved in the product you have experienced in the past five years. How long has the team been together? Indicate when and why any professional dedicated to the product left or joined the firm in the past three years. What were/are their job responsibilities? For personnel who have left indicate job titles and years with the firm and who replaced them.


DEPARTED


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37

D. FUND OF FUNDS INVESTMENT PHILOSOPHY, POLICY AND PROCESS (For Fund of Funds managers only. Multi-strategy managers should skip to section E).

1. Describe in detail the investment philosophy and process employed by your firm for this hedge fund strategy. How has this philosophy changed over time?

2. Provide the following performance information over the past 5 years: What is the most appropriate benchmark? Would your firm be willing to adopt a

benchmark dictated by PRIM? Expected level of annualized outperformance relative to the index chosen. The absolute and relative volatility targets Standard deviation Beta to S&P 500 Beta to Lehman Aggregate Correlations with S&P 500 Correlations with Lehman Aggregate

3. Discuss strategy allocation decisions and your approach to allocating assets between different types of strategy allocations.

What is the process whereby these strategy allocations change? How frequently do they change? Fill out the strategy allocations in the table below.

Strategy Allocations Portfolio As

ofPortfolio As

ofPortfolio As

ofPortfolio As

of3/31/2006 12/31/2005 12/31/2004 12/31/2003

Equity Long/Short Equity Market Neutral Event Driven Global Macro/Tactical Other

4. Describe the manager identification process. What is the fund universe from which you select underlying funds? How many

hedge fund strategies are in your total universe? Do you use an internal, proprietary database of hedge funds? Do you use external

databases of hedge funds? Please describe. How many hedge funds do you follow closely? How many are on your “short”

recommended list?

5. Describe the manager evaluation process. Describe your criteria for investing in managers. Describe any minimum qualifications for investing in the underlying funds. Describe the transparency you require from the hedge funds you invest in.

38

Describe the liquidity you require from the hedge funds you invest in.

6. Discuss the qualitative and quantitative research process. What percentage of the research effort is conducted internally/externally? How much of the process is top down vs. bottom up? Discuss what makes your firm unique in being able to identify capable hedge

fund strategies.

7. Describe the underlying manager due diligence process. What is the process? Who is involved? Do you also perform operational due diligence? Explain.

8. Describe your portfolio construction process. Include in your discussion the qualitative and quantitative processes utilized.

Discuss number of managers in the proposed portfolio. Has the average number of managers changed over time?

Describe how individual manager weightings are determined and how assets are allocated to individual funds in the portfolio.

What is the largest percentage of the portfolio that one single manager can represent (as percentage and dollar amount)? What is the largest manager allocation as of 3/31/06?

How do you invest new capital into the market? Have you added number of managers or increased allocations to existing managers?

How do you handle redemptions? Please state the number of underlying funds “closed” to new capital in the current

portfolio. What percent of your capital base do these funds constitute? Discuss the depth of diversification. Do you have maximum strategy allocations? What are they? What is the geographical diversification? Please break down target and actual

diversification by region. Has the fund deviated from its initial strategy due to changes in asset levels

and/or market conditions? Please describe.

9. Provide a list of managers that would be included in the proposed portfolio.

10. What is the ongoing monitoring process of the hedge funds you invest in? How do you monitor the product’s adherence to its investment style and process?

Specify who is responsible. How has performance distributed across managers and time? Please comment on the fund’s volatility, including both target and actual. What is the average holding period for managers? Provide data on the level of turnover of underlying fund managers and specific

reasons why you may have changed managers. List liquidated hedge funds that were part of the portfolio. State the percentage

that shut down due to poor performance vs. voluntary retirement, etc.

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Have you invested in any fund that has been the subject of any regulatory/legal action?

Have you ever invested in any fund that has lost more than 50% of the assets you invested?

What is the maximum monthly drawdown, as a percentage of fund assets, that you’ve experienced at the individual manager level?

Provide the 5 maximum drawdowns, in percent of equity for the portfolio, the recovery period, and explain reasons they have happened.

11. How is portfolio risk managed and monitored? Describe all risk management functions and software tools utilized.

What is your firm's definition of risk with respect to this product? If more than one, specify each with its percentage of importance.

How is your risk management analysis incorporated into the portfolio management process. Do you use cash as a method of risk control? Indicate how much cash is generally held in the portfolio. Describe the risk exposure (VAR) and other risk analyses you are able to provide investors on an ongoing basis. Provide copies of any materials of this type that you offer clients.

12. Please explain: Maximum leverage at the total portfolio level (% gross long) Maximum leverage at the individual manager level (% gross long) Highest amount of individual manager leverage used so far (% gross long) Typical net market exposure for the total portfolio (% net long/short) Minimum and Maximum net exposure

13. Provide the level of transparency you provide clients. Comment on the following types of transparency:

Organizational (assets, key professionals, ownership) Process (investment process, research, portfolio construction) Portfolio (risk exposure/VAR, country and sector exposure, leverage) Security (individual positions and securities, both long and short) Transaction (transaction history including brokers/commissions)

14. Describe how your firm addresses market timing, and describe how cash is invested.

15. Discuss in detail your firm’s approach to minimizing dispersion between separate accounts and commingled pools. Describe the procedures in place to ensure that portfolios are consistently managed.

16. If you have soft dollar relationships with broker-dealers, please disclose the following: Soft dollar policy and when last reviewed. Percentage of trades executed tied to soft dollar relationships.

40

List of resources funded by soft dollars that would normally be funded with hard dollars.

17. Discuss in detail your policy on subscriptions and redemptions for your fund. Specifically address timing of subscriptions, lock-up periods, notice periods, and redemption. Comment on any special provisions that exist (i.e. lock-ups, reserves, in-kind payments, exit fees, delayed payments, queues, etc.).

18. Describe the liquidity terms, including: Minimum initial investment Minimum subsequent investment Subscription frequency and timeframes Redemption frequency and timeframes Redemption notice period Redemption cash proceeds time period Lock ups or liquidity constraints Do you allow transfer of shares between nominees?

19. Do you currently work with any beta overlay providers on a portable alpha mandate? Explain.

20. Are you able to provide accurate, audited asset and transaction statements within 2-3 weeks of month's end? Explain. PRIM currently requires investment managers to provide the Custodian reports of net asset value by the fifth business day after month end and monthly performance reports by the seventh business day after month end.

21. Describe what circumstances or market conditions would favor your product’s strategy? When can it be expected to be out of phase or be unrewarded? Comment on volatility, trends, liquidity, and correlation markets.

22. What unique attributes does your firm have that distinguishes it from its competitors in fulfilling this assignment. Describe any strengths and weaknesses that would impact the servicing of the PRIM account.

23. Describe how your product differentiates itself from those of PRIM’s hedge fund managers. What role would your portfolio play in PRIM’s portable alpha portfolio?

24. Given the asset allocation of PRIM’s current portfolio (see exhibit A) and the objectives of the portable alpha program, please detail a recommendation plan for how your firm would implement the mandate.

E. MULTI-STRATEGY MANAGERS INVESTMENT PHILOSOPHY, POLICY AND PROCESS (Multi-Strategy managers only, Fund of Funds managers should skip to section F).

41

1. Describe in detail the investment philosophy and process employed by your firm for this hedge fund strategy. How has this philosophy changed over time?

2. Provide the following performance information over the past 5 years: What is the most appropriate benchmark? Would your firm be willing to adopt a

benchmark dictated by PRIM? Expected level of annualized outperformance relative to the index chosen. The absolute and relative volatility targets Standard deviation Beta to S&P 500 Beta to Lehman Aggregate Correlations with S&P 500 Correlations with Lehman Aggregate

3. Discuss strategy allocation decisions and your approach to allocating assets between different types of strategy allocations.

What is the process whereby these strategy allocations change? How frequently do they change? Can strategy allocations go to zero? Fill out the strategy allocations in the table below.

Strategy Allocations Portfolio As

ofPortfolio As

ofPortfolio As

ofPortfolio As

of3/31/2006 12/31/2005 12/31/2004 12/31/2003

Equity Long/Short Equity Market Neutral Event Driven Global Macro/Tactical Other

4. Describe your investment approach. Universe from which securities are selected. Investment criteria for new positions. Types of instruments used (by percentage). Discuss minimum, maximum, and average number of instruments. Discuss the use, advantages, potential risks, risk controls, and experience with

these instruments. Maximum sector and security exposures. Market capitalization ranges by sector and security. What is the geographical diversification? Please break down target and actual

allocations by region. Discuss the depth of diversification in the portfolio. What percentage of the research is conducted internally/externally? How much of the process is top down vs. bottom up?

42

Has the fund deviated from its initial strategy due to changes in asset levels and/or market conditions? Please describe.

Discuss what makes your firm unique in being able to build a multi-strategy portfolio

5. Describe your portfolio construction process. Include in your discussion the qualitative and quantitative processes utilized.

How many investments are typically contained in a portfolio? Has the average number of investments changed over time?

How are position size and weightings determined, and how are assets allocated to individual securities in the portfolio.

What is the largest percentage of the portfolio that one single investment can represent. What is the largest position as of 3/31/06?

What are the most important industries in the portfolio and what are their weights?

What is the breakdown in terms of long and short positions? What is the role of short positions?

What were your longest and shortest held securities in the fund? Why? How do you invest new capital into the market? Have you added positions or

increased position size? How do you handle redemptions? Have you encountered position limit problems? Explain.

6. Please provide a sample portfolio.

7. Discuss you buy/sell discipline. Provide data on the level of turnover. Discuss average holding period for all investments, profitable investments, and

losing investments. How has performance distributed across positions and time? Have you had even profits in all issues or has there been a concentration that

accounted for the majority of the gains of the fund at any one time?

8. How is portfolio risk managed and monitored? Describe all risk management functions and software tools utilized.

What is your firm's definition of risk with respect to this product? If more than one, specify each with its percentage of importance.

Describe any risk measurement models used and how this analysis is incorporated in the portfolio management process. Describe the risk exposure (VAR) and other risk analyses you are able to provide investors on an ongoing basis. Provide copies of any materials of this type that you offer clients. Discuss position and stop loss limits and their management. How frequently are

these applied? When were their peaks observed? How do you adjust your risk capital allocation when there is significant increase

in equity due to trading profits?

43

Do you use cash as a method of risk control? Indicate how much cash is generally held in the portfolio. Describe how you monitor and manage:

Liquidity risk, specifically commenting on how you would handle an "illiquidity event"

Common factor analysis Value at risk (VAR) What are the main sources of marginal risk in the portfolio? Portfolio Duration - is it a residual to the portfolio construction process? Risk controls as they pertain to credit quality, callability, interest rate

volatility, default losses, etc.

10. Please explain the maximum, average range, and value of the following (as % of portfolio assets):

Portfolio gross long position Portfolio gross short position. Portfolio net position. Portfolio beta. Largest single position concentration. Country concentration Sector Net Exposure Number of long positions in the portfolio Number of short positions in the portfolio Annual portfolio turnover

11. Discuss use of leverage: What is the rationale for use of leverage in the fund? What is your leverage

exposure policy? What is the maximum allowable leverage at the total portfolio level? What is the average amount of leverage used? What were the highest and lowest degrees of leverage used over the last 12

months? Is the fund ever run without leverage? How many banks/brokers extend leverage to the fund? Has leverage ever been revoked to the fund for any reason? If so, why? How does the fund hedge against interest rate exposure and currency risk?

12. Describe your firm’s trading capabilities related to this product. Provide a description of your trading platform, including systems (proprietary and off-the-shelf) for execution and processing.

Describe the allocation objectives and implementation procedures across all accounts. What is the process by which trades are allocated across separate accounts as opposed to commingled accounts? Please describe both the tactic of allocating the initial trade as well as the strategy of building positions across accounts.

Is trading segmented by investment product platform?

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How many traders are there and what is their experience? Describe the trading systems and strategies you use, and indicate any

enhancements your firm is contemplating. What steps have you taken to automate the trade flow process? What areas are

still handled manually? How do you leverage your infrastructure to ensure firm-wide collaboration in

execution (broker/dealer relationships) and capital market conditions (liquidity)? How does your firm manage to and monitor market liquidity?

Describe how you measure trading costs (commissions and market impact). Describe your firm’s policy regarding the use of soft dollars. If your firm is affiliated with a broker/dealer, describe whether or not you trade

through this affiliated brokerage. Discuss your internal monitoring process for final price determination and trade

order management. Do you have dedicated committees overseeing these functions? If so, please list the members.

What processes do you have in place for ensuring pre- and post-trade guideline compliance? What functions are automated? What process do you have in place for human verification? Who signs off on final trading?

Please describe the oversight procedures that would minimize the risk of traders acting outside of their given latitude in executing trades.

13. Provide your average annual commission costs as a percentage of total assets: Brokerage to equity ratio Administrator fee to equity ratio Custodian fee to equity ratio Auditor’s fee to equity ratio

14. Comment on volatility: How volatile is the fund relative to its peers? If more volatile, please validate the

extra risk. Over the past 12 months, how many daily drawdowns greater than 5% have

occurred, and what was the length of recovery.

15. Describe how your firm addresses market timing, and describe how cash is invested.

16. Describe the level of transparency you provide clients. Comment on the following types of transparency: Organizational (assets, key professionals, ownership) Process (investment process, research, portfolio construction) Portfolio (risk exposure/VAR, country and sector exposure, leverage) Security (individual positions and securities, both long and short) Transaction (transaction history including brokers/commissions)

17. Discuss in detail your firm’s approach to minimizing dispersion between separate accounts and commingled pools. Describe the procedures in place to ensure that portfolios are consistently managed.

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18. If you have soft dollar relationships with broker-dealers, please disclose the following: Soft dollar policy and when last reviewed. Percentage of trades executed tied to soft dollar relationships. List of resources funded by soft dollars that would normally be funded with

hard dollars.

19. Discuss in detail your policy on subscriptions and redemptions for your fund. Specifically address timing of subscriptions, lock-up periods, notice periods, and redemption. Comment on any special provisions that exist (i.e. lock-ups, reserves, in-kind payments, exit fees, delayed payments, queues, etc.).

20. Describe the liquidity terms, including: Minimum initial investment Minimum subsequent investment Subscription frequency and timeframes Redemption frequency and timeframes Redemption notice period Redemption cash proceeds time period Lock ups or liquidity constraints Do you allow transfer of shares between nominees?

21. What is your firm’s policy on handling corporate actions that would impact portfolio holdings?

22. Are you able to provide accurate, audited asset and transaction statements within 2-3 weeks of month's end? Explain. PRIM currently requires investment managers to provide the Custodian reports of net asset value by the fifth business day after month end and monthly performance reports by the seventh business day after month end.

23. Do you currently work with any beta overlay providers on a portable alpha mandate? Explain.

24. Describe what circumstances or market conditions would favor your product’s strategy? When can it be expected to be out of phase or be unrewarded? Comment on volatility, trends, liquidity, and correlation markets.

25. What unique attributes do your firm have that distinguishes it from its competitors in fulfilling this assignment. Describe any strengths and weaknesses that would impact the servicing of the PRIM account.

26. Describe how your product differentiates itself from those of PRIM’s hedge fund managers. What role would your portfolio play in PRIM’s portable alpha portfolio?

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27. Given the asset allocation of PRIM’s current portfolio (see exhibit A) and the objectives of the portable alpha program, please detail a recommendation plan for how your firm would implement the mandate.

F. OPERATIONS/BACK OFFICE/INTERNAL CONTROLS

1. How many back office operations professionals support the subject product? Please specify locations.


BACK OFFICE OPERATIONS

NameTitle/


Yrs @Firm



3. Do any individuals have veto power over investment decisions?


5. Provide an organizational chart that diagrams the different operations functions dedicated to the product area. Professionals should be identified over their areas of responsibility.

6. Discuss the causes and impact of any turnover (departures or hiring/promotions) of any operations professionals directly involved in the product you have experienced in the past five years. How long has the team been together? Indicate when and why any operations professional dedicated to the product left or joined the firm in the past three years. What were/are their job responsibilities? For personnel who have left indicate job titles and years with the firm and who replaced them.


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DEPARTED


leaving


7. Provide a detailed summary of your firm’s internal control structure. Does the firm conduct a periodic risk assessment? Provide a copy of SAS 70 if available, or other internal control review documentation, preferably by an independent third party.

8. Provide copies of the firm’s most recent audited financial statements and auditor’s management letter.

9. Comment on the role of the fund auditor: Have there been any disciplinary or regulatory problems with any members of staff

or the firm as a whole? Has the firm or any individuals been involved in any legal action?

Is the firm regulated? If so, by whom? What do the registrations allow the firm to do? If not regulated, what exemptions are relied upon?

What factors influenced your selection of the auditor? Is fund performance audited? Where previous audits performed by other firms? Have there been any problems with previous audits? How do the auditor track the fund’s assets during an audit? Does any affiliate have a current or past relationship with the auditor? How do the fees compare to those of other auditors?

10. Describe the following back office and operational processes (Fund of Funds Only) Are any back-office operations outsourced? If outsourced, what are the details of

the agreement, including the economics of the relationship? What factors influenced your selection of the administrator? Do you have a

previous relationship with the administrator? Who manages the back-office operations or relationship with administrator?

Who within the firm has authority to move cash? Are dollar limits imposed and multiple signatures required?

Who will have ultimate responsibility for accurately and timely accounting for and reporting PRIM’s investment portfolio on a monthly basis?

How exactly are net asset values calculated? From where is the information received? How soon after month-end is the final NAV communicated to clients?

How frequently do you have an independent verification of the valuation of your accounts? Who performs this valuation? What methods are used?

What procedures are performed when performing back-office due diligence on underlying hedge fund managers?

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What is the process for assessing underlying manager valuation processes? What procedures are performed?

What percentage of underlying hedge fund manager portfolios are invested in illiquid or subjectively priced securities?

Does the firm perform “spot checks” on underlying manager prices? Has an error ever been identified? If so, what action was taken?

11. Describe the following back office and operational processes (Multi-Strategy Only) Are any back-office operations outsourced? If outsourced, what are the details of

the agreement, including the economics of the relationship? What factors influenced your selection of the administrator? Do you have a

previous relationship with the administrator? Who manages the back-office operations or relationship with administrator? Does the administrator calculate the NAV? If so, how? Does the administrator reconcile each trade?

Who do you use for a prime broker/custodian? What factors influenced your selection of the prime/broker custodian? How do you monitor and measure their performance?

Are trading policies and procedures for all investment strategies adequately documented? What type of trading system is utilized? Is the system proprietary or commercial?

How much price discretion do traders have? How are trades allocated among accounts? At what point are trades allocated? How are executed trades communicated to the portfolio accounting system? Is the information automatically transmitted? How do you ensure all trade information is captured, including non-exchange traded derivatives? Describe internal controls in place designed to limit potentially harmful activities of your firm’s traders and other investment professionals.

Who within the firm has authority to move cash? Are dollar limits imposed and multiple signatures required?

How exactly are net asset values calculated? From where is the information received? How soon after month-end is the final NAV communicated to clients?

How frequently do you have an independent verification of the valuation of your accounts? Who performs this valuation? What methods are used?

Discuss how the securities in your portfolio are valued. Are there any differences in how you value liquid versus illiquid securities?

Is a Pricing Group employed that is separate and district from the investment management and operations functions? Are pricing policies and valuation procedures documented and current?

How are proxies handled? How do you monitor and record corporate action items?

G. COMPLIANCE/REGULATORY

1. How many compliance professionals support the subject product? Please specify locations.

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COMPLIANCE

NameTitle/


Yrs @Firm




4. Provide a detailed summary of your firm’s compliance regime. Has the firm established written policies procedures in accordance with SEC Rule 206(4)-7? Has the firm developed a process for evaluating the adequacy and effectiveness of these policies and procedures? How often are they reviewed for adequacy and effectiveness? How often are compliance policies and procedures updated?

5. Does your firm have a designated Chief Compliance Officer in accordance with SEC Rule 206 (4)-7? Describe the Chief Compliance Officer’s role in the firm.

6. Does your firm maintain a code of ethics? If so, please attach.

7. During the past five years, has the firm been subject to any litigation alleging fraud, breach of fiduciary duty, or other willful misconduct?

8. . Has your firm ever had any compliance violations or client guideline violations? If so, please describe how violations were dealt with and resolved.

H. PERFORMANCE (Simulated results are not acceptable.)

1. a. Provide annual performance on a total return basis NET OF ALL FEES AND MANAGEMENT COSTS from inception for the subject product. Indicate if returns are net or gross of custody costs. Use AIMR standards or, if different, indicate explicitly how they differ. Indicate whether the subject performance is the composite performance or that of the commingled account vehicle. Please complete the both tables below. YOU MUST COMPLETE THE 2 TABLES BELOW OR YOUR SUBMISSION MAY NOT BE PROCESSED. IN ADDITION, PLEASE ENTER THIS INFORMATION IN THE EXCEL SPREADSHEET (EXHIBIT E, Tabs 3 and 4-Monthly and Quarterly Performance) AND SUBMIT IT WITH YOUR RESPONSE. PLEASE DO NOT CHANGE THE SPREADSHEET FORMAT.

TABLE#1 Hedge Fund Product Performance

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2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995

Month 1

Month 2

Month 3

Month 4 N/A

Month 5 N/A

Month 6 N/A

Month 7 N/A

Month 8 N/A

Month 9 N/A

Month 10 N/A

Month 11 N/A

Month 12 N/A

Total Return ___%___%___%___%___%___%___%___%___%___%___%___%

LIBOR ___%___%___%___%___%___%___%___%___%___%___%___%

Difference ___%___%___%___%___%___%___%___%___%___%___%___%

TABLE #21 Year 3 Years 5 Years 10 Years

Annualized Ended Ended Ended EndedReturns 3/31/06 3/31/05 3/31/05 3/31/05

Return _______% _______% _______% _______%

LIBOR _______% _______% _______% _______%

Difference _______% _______% _______% _______%

Provide peer group rankings on an annualized and calendar year basis for the performance listed above. Please also provide a description of the peer group.

1. Provide underlying data for performance given in question F1(a), if applicable:

2006 2005 2004 2003 2002 2001 2000 1999

Assets in CompositeNumber of Accts

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High ReturnMedian ReturnLow Return

2. a. Describe causes for investment return deviation (both positive and negative) from the stated benchmark return by calendar year. In the attribution analysis identify contributions of stock and sector selection.

2006 2004 2003 2002 2001 2000 Issue/Manager Selection ______

Sector/Industry Selection ______

Other (specify) ______

Total Difference ______

b. Was the attribution analysis calculated internally or externally? If internal, please describe in detail the methodology used; if external, please name your

I. CLIENT SERVICE

1. Which of your firm’s offices would service this account? What services would specifically be provided by which office?

2. Who will be the client service officer? How often could the person be available for client meetings? How often could the portfolio manager, chief investment officer and/or firm president be available for client meetings?

3. List all reports and correspondence usually sent to clients. Explain the frequency and detail reported to investors.

4. Describe the performance measurement information you are able to provide to your investors on an ongoing basis. Provide copies of any materials of this type that you offer your clients.

5. Describe in detail any restrictions you place on information available to clients, prospects and agents (consultants) thereof.

J. SAMPLE PORTFOLIO

Please submit a sample portfolio (preferably an actual portfolio) as of March 31, 2006, which would reflect the investment style of the product proposed for this account.

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K. EXECUTIVE SUMMARY.

Please submit an executive summary consisting of not more than 3 one-sided pages which summarizes the contents of the Proposal with the firm’s name identified on the top of the first page. If the firm is selected for a finalist interview, this summary will be provided to the Investment Committee in advance of any interview. Please be aware that all members of the Investment Committee may not have read your complete Proposal, which will be evaluated by the Search Committee.

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XI. Fee Proposal

FIRM RFP__________________________

BETA OVERLAY MANAGER

Once a manager has been selected, negotiations of the fee may become necessary in order to account for the size of funding, the increments of funding, and any clarification. In no case will the negotiations result in a fee that is higher than the fee contained in the proposal. Assume a $1.4 billion account size for purposes of the below fee bid.

A. Proposed Fees

Asset-based Fee Schedule: basis points per annum.Please list separate schedules for commingled/separate account management.

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XI. Fee Proposal

FIRM RFP__________________________

ALPHA HEDGE FUND MANAGER

Once a manager has been selected, negotiations of the fee may become necessary in order to account for the size of funding, the increments of funding, and any clarification. In no case will the negotiations result in a fee that is higher than the fee contained in the proposal. Assume a $300 million account size for purposes of the below fee bid.

A. Proposed Fees

The PRIM Board may use an asset-based fee arrangement. Would your firm accept this type of fee arrangement?

Asset-based Fee Schedule: basis points per annum.Please list separate schedules for commingled/separate account management.

Please describe any Administrative Fees, including: Custody, Audit, Legal, and Other. Are these fees included in the Management Fee or are they separate? Are administrative fees actual expenses or are they capped at some level? Explain.

B. Performance Fee

The PRIM Board may use a performance fee arrangement. Would your firm accept this type of fee arrangement?

If so, what is your proposed fee structure?

Please break out and describe the following in basis points:

1. Management Fees

2. Incentive Fees

3. Hurdle Rate (please describe)

4. High Water Mark

5. Clawback Provision

6. Waterfall Provision

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XII. Representations and Warranties

All proposers are required to submit an executed copy of the following Representations and Warranties as an attachment to the cover letter described in Section V.B.2. of this RFP:

A. Proposer warrants that it meets, or will meet before the award of the Agreement, the bonding requirement provided by Section 412 of the Employment Retirement Income Security Act of 1974 (ERISA) or that it carries at least an equivalent fidelity bond that will be applicable to proposer's actions under the Agreement (unless exempt, and explanation of exemption is attached).

B. Proposer warrants that it maintains both errors and omissions insurance as well as a fiduciary liability insurance providing a prudent amount of coverage for negligent acts or omissions and that such coverage will be applicable to proposer's actions under the Agreement.

C. Proposer warrants that it will not delegate its fiduciary responsibilities assumed under the Agreement.

D. Proposer warrants that it has completed, obtained, and performed all registrations, filings, approvals, authorizations, consents or examinations required by a government or governmental authority for acts contemplated by the Agreement.

E. Proposer warrants that it will agree to the provisions of the Agreement which are set forth in Exhibit B to this RFP.

F. Proposer warrants that it meets all of the minimum qualifications, listed below, applicable to the firm under the RFP as follows:

Please list each minimum requirement and specifically describe how your firm meets the applicable minimum qualifications specified in Section VIII. YOU MUST PROVIDE THIS INFORMATION, AS WELL AS A SIGNATURE ON THE BOTTOM OF THE DOCUMENT, OR YOUR SUBMISSION MAY NOT BE PROCESSED.

A Proposer must meet the following minimum qualifications to be given further consideration in PRIM’s search for an investment manager(s). Failure of a firm to meet the minimum qualifications applicable to the investment management services for which it is submitting a Proposal will result in the Proposal’s immediate rejection.

Section A is to be completed by firms submitting a response for the Beta Overlay Management Services. Section B is to be completed by firms submitting a response for the Alpha Generating Hedge Fund Investment Management Services. If firms are responding to both services, both sections should be completed.

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A. Basic Minimum Qualifications: Beta Overlay Management Services


1. The investment professionals must have at least a two-year performance history in the beta overlay strategy being proposed as of March 31, 2006.


3. The candidate must be responsible for managing at least $500 million in the beta overlay strategy being proposed as of March 31, 2006.


5. The candidate firm must have at least one tax-exempt institutional client invested in the beta overlay strategy being proposed, as of March 31, 2006.



_____________________Name of Firm Date

_____________________Signature Title

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B. Basic Minimum Qualifications: Alpha Generating Hedge Fund Investment Management Services.


1. The investment professionals must have at least a two-year performance history in the alpha strategy being proposed as of March 31, 2006.


3. The candidate must be responsible for managing at least $300 million in the alpha strategy being proposed as of March 31, 2006.


5. The candidate firm must have at least one tax-exempt institutional client invested in the alpha strategy being proposed, as of March 31, 2006.



_____________________Name of Firm Date

_____________________Signature Title

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XIII. EXHIBITS

59

EXHIBIT A

PRIM Asset Allocation

PRIM Investment Managers

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Pension Reserves Investment Management BoardAsset Allocation

As of February 28, 2006

Asset Class Long Term Target Allocation

ActualAllocation

Domestic Equity 21.0% 28.1%Portable Alpha 5.0% 0.0%International Equity 20.0% 16.6%Emerging Markets 5.0% 6.7%Fixed Income 10.0% 10.2%TIPS/ILBs 5.0% 5.2%High Yield Debt* 5.0% 8.5%Alternative Investments 10.0% 5.9%Real Estate 10.0% 10.4%Timber 4.0% 3.6%Absolute Return 5.0% 5.0%* High yield allocation currently consists of 5.5% to high yield bonds, 2.4% to distressed debt, and 0.6% to emerging markets debt; the Long Term Target allocation to high yield consists of 2 % to high yield bonds, 2% to emerging markets debt and 1% to distressed debt.

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Pension Reserves Investment Management BoardCurrent Investment Managers

Domestic EquityLarge Cap

State Street Global Advisors (passive)Goldman Sachs Asset ManagementINTECHPIMCOLegg Mason Capital Management, Inc.Gardner LewisNWQ

Small Cap Ariel CapitalAXA Rosenberg Investment ManagementEarnest PartnersLazard Asset ManagementMazamaNumeric InvestorsPutnamWellington Management Company LLPState Street Global Advisors (Passive)

International EquityBallie GiffordThe Boston CompanyMarathon Asset Management, Ltd. State Street Global Advisors (passive)

Emerging Markets EquityEmerging Markets ManagementGrantham, Mayo, Van Otterloo &Co LLC (GMO)T. Rowe Price

Fixed IncomeCore

Barclays Global Investors (passive)Blackrock Financial Management, Inc.Loomis Sayles & Company, L.P.Pacific Investment Management Company (PIMCO)Access Captial (ETI)

Inflation Linked BondsBarclays (Passive TIPS)Blackrock Financial Management (Global ILB’s + Commodities) Bridgewater Associates (Global ILB’s + Commodities)

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High Yield DebtHigh Yield Bonds

Fidelity Management Trust CompanyLoomis Sayles & Company, L.P.Shenkman Capital Management, Inc.

Emerging Markets DebtAshmore Investment Management Ltd.Grantham, Mayo, Van Otterloo &Co LLC (GMO)Pacific Investment Management Company (PIMCO)

Distressed DebtOaktree Capital Management, LLCAngelo, Gordon & Co. LPTrust Company of the West

Absolute ReturnArdenIvyK2 AdvisorsPAAMCORock Creek

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EXHIBIT B

Sample Investment Management Agreement-Beta Overlay Manager

Sample Investment Management Agreement-Hedge Fund Manager

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SAMPLEINVESTMENT MANAGEMENT AGREEMENT

(Beta Overlay Manager)

THIS AGREEMENT, dated as of [date], is made by and between the Pension Reserves Investment Management Board ("PRIM"), as trustee of the Pension Reserves Investment Trust (“PRIT”), and [manager] (the "Manager").

Introduction. Under Massachusetts General Laws, Chapter 32, Section 23, PRIM has general supervision of the investment and reinvestment of the PRIT Fund created by Chapter 32, Section 22 of such laws. PRIT has been established for the purpose of depositing, investing and disbursing amounts set aside to meet further liabilities of various public retirement systems in Massachusetts. PRIM is responsible for the administration of PRIT and enters into this Agreement appointing the Manager as investment manager of certain assets of PRIT pursuant to its authority under Massachusetts General Laws, Chapter 32, Section 23, subdivision (2A), paragraph (e), clause (iii).

1. Appointment of the Manager as Investment Manager. PRIM hereby appoints and retains the Manager, and the Manager agrees to serve as investment manager, upon and subject to the terms hereof, beginning at the opening of business on [date] (the “Effective Date”) and continuing until this Agreement is terminated in accordance with the terms hereof. The Manager hereby accepts appointment as such investment manager and agrees to provide services in accordance with (a) this Agreement, and (b) the investment objectives and investment guidelines set forth in Schedule A hereto (the “Investment Objectives and Guidelines”). The Investment Objectives and Guidelines may be modified from time to time by PRIM, upon at least thirty (30) days’ prior written notice to the Manager. Subject to such policies, the Manager shall use its best efforts to increase the value of the Account by causing the assets in the Account to be invested and reinvested from time to time.

2. The Account. The responsibilities and duties of the Manager are limited to the assets of the account designated by PRIM (the "Account"), which assets will be only a portion of the assets of PRIT. From time to time, PRIM may transfer other assets of PRIT to the Account or withdraw any assets from the Account upon written notice to the Manager. Nothing in this Agreement will constitute a commitment by PRIM to maintain any minimum amount of assets in the Account. The Manager also shall furnish to PRIM necessary assistance in the preparation of all reports relating to the Account now or hereafter required by applicable law.

3. Investment Objectives and Guidelines. The Manager will have full responsibility to invest and reinvest the Account, principally in marketable small cap domestic equity securities in accordance with the Investment Objectives and Guidelines, and in compliance with the Operating Trust of PRIM and all applicable laws and regulations.

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4. Discretionary Authority. The Manager shall have only those powers set forth in the Operating Trust of the Pension Reserves Investment Management Board, as amended, which powers are explicitly granted to the Manager by PRIM in this Agreement and, with respect to the assets of the Account, all powers which are not so granted shall be exercised only by PRIM. Pursuant to Section 9.2(h) of the Operating Trust, PRIM authorizes the Manager to invest the Account in accordance with the Investment Objectives and Investment Guidelines set forth in Schedule A. PRIM reserves the right to control and invest all cash balances that may exist in the Account, and the Custodian (as defined in Section 6) will inform PRIM as to the need for or availability of cash as a result of securities transactions. In carrying out its responsibilities as investment manager, and subject to this Section 4, and the Investment Objectives and Guidelines, the Manager will have full and complete discretion to direct and manage the investment and reinvestment of assets in the Account with full and exclusive power and authority (a) to buy, sell, exchange, convert and otherwise trade in any securities as the Manager may select and (b) to establish and maintain and deal through accounts with one or more securities brokerage firms as the Manager may select. In making all such selections, the Manager will, bearing in mind the best interests of the Account, use its best efforts to obtain for the Account the most favorable net price and execution available. PRIM reserves the right to specify that any part of the securities transactions for the Account be directed by the Manager to securities brokerage firms that meet requirements or participate in programs or initiatives specified by PRIM. Consistent with Massachusetts General Laws, Chapter 32, Section 23, subdivision (2A)(h), in selecting brokerage firms, the Manager will use its best efforts to benefit and expand the economic climate of the Commonwealth of Massachusetts, including by utilizing brokerage firms within the Commonwealth, so long as this is consistent with its duties and obligations hereunder.

5. Confidentiality. The Manager will maintain in strictest confidence the investment advice and information it furnishes to or receives from PRIM or the Custodian (as defined in Section 6) in connection with this Agreement; provided, however, that the Manager will be permitted to disclose or communicate to a proper party any information received from PRIM or the Custodian or developed by the Manager under the terms of this Agreement, if such disclosure or communication is necessary to carry out the purposes of this Agreement or is required by law. Before such disclosure or communication, the Manager, unless prohibited by law, will notify PRIM of the information to be disclosed or communicated and the party to whom that information will be disclosed or communicated. The terms of this paragraph shall not be interpreted so as to prevent the Manager from providing investment advice to other clients who share comparable investment objectives with PRIM, or to prohibit the Manager from utilizing the Manager’s investment experience or performance with respect to the Account on an undisclosed basis for use in composite performance presentations. The Manager hereby approves of periodic reports by PRIM and its staff of the Manager’s investment program and investment results hereunder, recognizing that such reports may be public records available to the media and the public.

6. Custody of Account Assets. PRIM has entered into an Agreement with Boston Safe Deposit and Trust Company to act as custodian for all assets of PRIT being managed by investment managers, including without limitation any cash which may be in the Account from time to time, and no assets of the Account may be delivered or paid to

66

the Manager. The entity serving as such custodian from time to time is herein referred to as the “Custodian”. The Manager will furnish to the Custodian, with a copy to PRIM, a list of the Manager’s personnel who are authorized to give instructions to the Custodian with respect to the Account, and will forthwith upon any change in such personnel furnish an amended list to the Custodian, with a copy to PRIM. The Custodian will maintain separate records for the Account, and the Manager agrees to furnish to the Custodian all information reasonably necessary to maintain such records. The Manager shall have no responsibility or liability with respect to the acts, omissions or other conduct of the Custodian. PRIM reserves the right to change the Custodian upon thirty (30) days’ notice to the Manager.

7. Statement of Account; Valuation; Reports. The Manager shall keep full and complete records of all transactions with respect to the Account and will, at the end of each month during the term of this Agreement, render a statement thereof to PRIM together with a portfolio analysis of the Account and performance comparisons related thereto, and a listing of applicable transaction costs including brokers used and commissions paid, if any, to brokers and the average cents per unit for trades. The Manager shall also furnish to PRIM such additional reports with respect to the Account as PRIM shall reasonably request from time to time, including the information set forth in Schedule C hereto (“Investment Manager Compliance” reports). On a monthly basis, no later than the seventh business day, the Manager shall also deliver to the Custodian a report of all transactions in the Account during the prior month and a listing of each investment in the portfolio and its net asset value at the end of said month. The Manager shall also from time to time, but no less than semi-annually, attend meetings (which, in PRIM’s sole discretion, may be by telephone conference) with PRIM to discuss the Account and the investment outlook.

PRIM shall cause the Custodian to provide the Manager with an appraisal of the assets in the Account as of the last business or trading day of each month, together with a transaction statement for the month listing all transactions occurring during the month as well as opening and closing cash balances. This statement will be rendered on a trade date basis and include any accrued income calculations. The Manager shall be responsible for reconciliation of the Account with the Custodian on a monthly basis, and shall promptly notify PRIM of all unresolved material differences.

The Manager shall promptly notify PRIM in writing (1) of any change in the Manager’s representations in this Agreement during the term of this Agreement; (2) of any change in the senior management and key investment professionals, or material changes in ownership of the Manager’s organization; (3) of any change in the senior portfolio management team of the Account; (4) of any change in approach to the management of the Account; (5) of any other material change in the Manager’s business activities or circumstances, including changes affecting the Manager’s equity capital; (6) of any action taken by the Manager that is contrary to or inconsistent with this Agreement, including the Investment Objectives and Investment Guidelines set forth in Schedule A; and (7) of the commencement by any governmental regulatory or law enforcement agency of any investigation, examination or other proceeding directly involving the Manager, its owners, or employees, except such investigations, examinations or other proceedings as are routinely conducted in the ordinary course of the Manager’s business.

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8. Fees and Expenses. The Manager will be entitled to receive from PRIM as complete compensation for services rendered hereunder the fees set forth in Schedule B hereto. The Fee Schedule may be modified by mutual agreement of the parties in writing. Such fees will be paid by PRIM at the times and in the manner specified in the Fee Schedule, and will be pro-rated from the Effective Date. The Manager will not be paid or reimbursed for any expenses except to the extent permitted by PRIM in writing. In the event that the Manager currently or at any time during the continuation of this Agreement performs similar services for other clients with a similar dollar level of assets at a lower or more favorable fee schedule, the Manager will promptly notify PRIM of such arrangement.

9. Services Not Exclusive. The services of the Manager and its personnel to be provided under this Agreement are not exclusive, and the Manager may provide services to others and engage in other activities, but the Manager will allocate such personnel and devote such efforts as are necessary for it to carry out its duties under this Agreement. The Manager may give advice and take action in the performance of its duties with respect to any of its clients which may differ from the advice given, or the timing or nature of action taken, with respect to the Account, so long as the Manager adheres to a policy of allocating investment opportunities to the Account over a period of time on a fair and equitable basis relative to other clients. Nothing in this Agreement shall impose upon the Manager any obligation to purchase or sell for the Account any security or other property which the Manager purchases or sells for its own account or the account of any other client if, in the opinion of the Manager, such transaction or investment appears unsuitable, impracticable or undesirable for the Account.

10. Procedures. All transactions will be consummated by payment to, or delivery by, PRIM, or such other party as PRIM shall have designated in writing as the Custodian. Instructions of the Manager to PRIM and/or the Custodian will be made in writing (or by such electronic means as the Manager and PRIM and/or the Custodian may establish and maintain from time to time). The Manager will instruct all brokers or dealers executing orders on behalf of the Account to forward to PRIM and/or the Custodian copies of all brokerage confirmations promptly after execution of transactions. The Manager shall have full and complete discretion to establish accounts with one or more securities brokers as the Manager may select. The Manager shall not be responsible for any acts or omissions by any such broker or brokers, or third parties. The Manager is hereby authorized to combine orders on behalf of the Account with orders on behalf of other clients of the Manager. As set forth in Section 4, the Manager will use its best efforts to obtain the most favorable net price and execution available on securities traded for the Account.

11. Persons Authorized to Act for the Manager. The Manager will from time to time certify to PRIM the name of the person or persons authorized to act on its behalf and will give PRIM a specimen of his or their signatures. Any person so certified will be an authorized representative of the Manager for purposes of this Agreement and his authority to act on behalf of the Manager will continue until notice to the contrary is given by the Manager and received by PRIM.

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12. Persons Authorized to Act for PRIM. PRIM may from time to time designate any person or persons to act on its behalf in giving instructions, directions, notices or other communications to the Manager and will certify the name of such person or persons to the Manager and give the Manager a specimen of his or their signatures. The authority of any such person to act on behalf of PRIM will continue until notice to the contrary is given by PRIM and received by the Manager. All oral instructions shall be promptly confirmed in writing.

13. Proxies. PRIM will vote all proxies for securities held in the Account. The Manager shall, in conjunction with PRIM and the Custodian, develop procedures to facilitate the timely exercise by PRIM of these rights.

14. Representations by the Manager. The Manager represents and warrants that it is registered and in good standing as an investment adviser pursuant to the Investment Advisers Act of 1940, as amended, and that it has completed, obtained or performed all other registrations, filings, approvals, authorizations, consents or examinations required by any government or governmental authority for the performance of the acts contemplated by this Agreement. The Manager will deliver documentation of such compliance annually or as PRIM may reasonably request. PRIM acknowledges receipt of Parts I and II of the Manager’s Form ADV, and the Manager's Disclosure Statement, as required by Rule 204-3 under the Investment Advisers Act of 1940, not less than 48 hours prior to the date of execution of this Agreement.

15. Termination. This Agreement may be terminated at any time by PRIM upon written notice to the Manager of such termination, and by the Manager upon thirty days’ written notice to PRIM, effective as of the date set forth in such notice. Any termination of this Agreement shall be without payment of any penalty by PRIM.

A pro rata determination of fees, if appropriate, will be made for any quarter in which this Agreement has been terminated. Any performance fee owed but still due at time of termination will be paid over the remaining time and in accordance with the established payout schedule as provided for in Schedule B.

PRIM may also at any time without prior notice direct the Manager to cease activity with respect to the Account, provided, however, that all trades executed but not settled prior to such direction shall be settled. Upon termination the Manager shall cooperate with PRIM to transfer the securities and other assets in the Account and on the effective date of the termination of this Agreement or as close to such date as is reasonably possible, the Manager shall provide PRIM with a final report containing the same information as provided in the monthly reports provided pursuant to Section 7.

16. Fiduciary Status of The Manager; Chapter 268A. With respect to the performance of its duties and responsibilities hereunder for the Account, the Manager acknowledges that it is a "fiduciary" within the meaning of Chapter 32 of the Massachusetts General Laws. The Manager will discharge its duties and responsibilities under this Agreement in accordance with the fiduciary standards of conduct and other requirements as they apply to the Manager. The Manager is advised of the existence of Massachusetts General Laws, Chapter 268A (the Massachusetts "Conflict of Interest" statute), and is expected to act and perform its duties in accordance with such provisions.

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The Manager acknowledges that PRIM has delivered a copy of Chapters 32 and 268A of the Massachusetts General Laws as currently in effect to the Manager.

17. Liability. The Manager shall not be liable for the selection of the Investment Objectives and Guidelines but shall be responsible for the management of the Account in accordance therewith and with such other instructions as PRIM may provide from time to time. In addition to those requirements set forth in Section 16, at all times the Manager shall exercise the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent expert acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of like character and with like aims. The Manager shall have no responsibility whatsoever for the management of any other assets of PRIT and the Manager shall have no duty, responsibility, or liability in connection with the operation or the administration of PRIT. The Manager shall not be subject to liability for any act, omission or mistake of judgment in the course of, or connected with, the performance of its responsibilities hereunder, except for its own negligence, willful misconduct or lack of good faith. Nothing herein shall be construed to waive any liability that the Manager has under applicable federal or state securities laws, or ERISA. No obligation of the Manager, under this Agreement or otherwise, shall be binding personally upon any of the shareholders, officers, agents, employees or trustees of any trust which the Manager may have established.

18. Authority. Each of the parties to this Agreement represents that it is duly authorized and empowered to execute, deliver and perform this Agreement, that such action does not materially conflict with or violate any provision of law, rule or regulation, contract, deed of trust, or other instrument to which it is a party or to which any of its property is subject, and that this Agreement is a valid and binding obligation, enforceable against such party in accordance with its terms.

19. Bonding. The Manager agrees to maintain during the term of this Agreement any fidelity bond with respect to the assets of the Account which it would have to maintain to satisfy Section 412 of ERISA and the regulations thereunder if PRIM or PRIT were subject to the terms of ERISA.

20. “Soft Dollar” and Other Arrangements. On an ongoing basis not less than annually, the Manager will identify and provide a written description to PRIM of all “soft dollar” arrangements that it maintains with respect to the Account or with brokers or dealers which execute transactions for the Account. Prior to the commencement of the active management of the Account, and periodically thereafter, but no less often than annually, the Manager shall provide PRIM with a written description of all arrangements with third parties and other individuals, entities, brokers or money management firms who have or may receive or share in the payment of fees for services in connection with securing or continuing this Agreement.

21. Confirmations. The Manager will arrange to have brokers who effect transactions for the Account send to the Custodian confirmations of purchases and sales. Upon written request of PRIM, the Manager will arrange to have copies of any of the foregoing sent to any other persons designated by PRIM.

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22. Communication. Any approvals, instructions, directions, notices or other communications (other than oral instructions described in Section 12) pursuant to this Agreement will be mailed or delivered:

a) to PRIM at:

Pension Reserves Investment Management Board84 State Street, Suite 250Boston, Massachusetts 02110Attention: Michael Travaglini, Executive Director

b) to the Manager at:

[manager]

c) to the Custodian at:

Boston Safe Deposit Trust and Company135 Santilli HighwayAIM 026-0313Everett, MA 02149

Either party may change the address for notices or other communications to it by written notice to the other stating the new address. PRIM may change the name and address for notices or other communications to the Custodian by written notice to the Manager. Notices from either party to the other will be effective when received by the addressee.

23. Assignment, etc. The Manager will not assign this Agreement without the prior written consent of PRIM. This Agreement constitutes the entire Agreement of the parties with respect to its subject matter and may only be amended by a written amendment signed by both parties.

24. Headings; Attachments. Headings are for convenience only, and the text of this Agreement will govern the rights and obligations of the parties. Each of the Attachments hereto is incorporated herein by reference. Capitalized items used herein have the same meanings as in this Agreement.

25. Disputed Matters. With respect to any controversy or dispute arising out of this Agreement, interpretation of any of the provisions hereof, or the actions of the Manager or PRIM hereunder, each of the parties consents to the non-exclusive jurisdiction of all of the federal and state courts in the Commonwealth of Massachusetts, agrees that venue with respect to any action in such Commonwealth shall lie exclusively in Suffolk County, Massachusetts, and waives any defense of forum non conveniens; provided, however, that at the sole election of PRIM, any such controversy or dispute shall be submitted to arbitration before the American Arbitration Association under the Commercial Arbitration Rules then obtaining of said Association, such arbitration to be held in Boston, Massachusetts, and judgment upon any award thus obtained may be

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entered in any court having jurisdiction thereof. In any such arbitration each party to the arbitration shall bear its own expenses, including expenses of attorneys, financial experts and other witnesses; any arbitration fees and expenses of the arbitrators shall be divided equally between the disputing parties. Service of process on either party shall be deemed effective if made in the manner prescribed for the giving of notice in Section 22.

26. Massachusetts Law. This Agreement will be considered to be an instrument made under seal in the Commonwealth of Massachusetts and it will be construed and the rights and obligations of the parties determined in accordance with the laws of said Commonwealth, without giving effect to conflicts of laws principles.

IN WITNESS WHEREOF, the Manager and PRIM have executed this Agreement as of the date first above written.

PENSION RESERVES INVESTMENTMANAGEMENT BOARD

BY:_____________________________Michael Travaglini, Executive Director

[manager]BY:______________________________NAME: ___________________________

TITLE:___________________________

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[Manager]

Schedule A: Proposed Investment Objectives and Guidelines(Beta Overlay)

(Specific guidelines will be customized with managers)

I. Investment Objectives

The Manager’s performance benchmark is the _____ Index.

II. Investment Guidelines

A. Authorized Investments

To be customized to strategy

B. Specific Investment Guidelines


C. Portfolio Characteristics


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[Manager]

Schedule B: Fee Schedule

This page intentionally left blank

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[Manager]

Schedule C: Manager Compliance Report

Compliance Certification

In addition to the requirements of Paragraph 7 of the Investment Management Agreement, as soon as practicable at the close of each calendar quarter, the Manager shall certify to PRIM that:

1. the Manager has not deviated from the Investment Guidelines set forth in the Investment Objectives and Guidelines (Schedule A to the Investment Management Agreement);

2. the Manager has not deviated from the requirements of Massachusetts General Laws, chapter 32, section 23, concerning certain investments relating to South Africa and Northern Ireland, and tobacco.

If the Manager is unable to provide either of the certifications outlined above, the Manager shall provide PRIM with a detailed written explanation.

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[Manager]

Schedule D: Monthly Reconciliation Procedure

The Manager shall strike a monthly reconciliation with PRIM’s Custodian. This Schedule describes the reconciliation procedure that Manager will follow with respect to PRIM’s Account.

The attachments are as follows:

A. Monthly Reconciliation Schedule . This schedule (Attachment 1) details the timetable that must be followed each month.

B. Reconciliation Form . This is the form (Attachment 2) for reconciling with Custodian. The form must be filled out completely, with supporting data as necessary. The form comprises a number of reconciliation “elements” (shares, CUSIP number, income, etc.).

Reconciliations are completed when the Manager has accomplished the following steps:

1. reconciled both the CUSIP and share number for each security position with those shown on the Custodian’s records;

2. compared Custodian’s prices on each security to Manager’s prices and challenged Custodian’s prices on securities (if any) that exceed the Manager’s internal pricing tolerances;

3. reconciled portfolio income for the period with that shown on Custodian’s records;

4. noted methodology differences on the reconciliation form;5. resolved all differences with Custodian within a tolerance of less than or

equal to ten basis points (0.10%); and6. updated the Manager’s records to reflect all corrections necessary.

C. Methodology Schedule . This lists various methods by which Custodian arrives at the

final net asset value of a portfolio. If methodology differences consistently result in portfolio market values outside the monthly ten basis point tolerance, it may be necessary to refer to this schedule to determine the source of the problem. In all cases of conflicting methodologies, Custodian’s methodology will govern.

D. Monthly Performance Report . Once the accounting reconciliation has been completed, Attachment 4, the format for a performance comparison, must be completed and faxed to the Custodian contact shown on this Attachment. Custodian Analytics will compare the Manager’s return to their returns and, in the event the difference between the Manager’s return and the Custodian return is excessive, Custodian will contact the Manager to resolve such discrepancies.

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In order to adhere to the timetable set forth in Attachment 1, the Manager will need to have the Custodian’s online system installed in the Manager’s operations area so that reconciliation can be performed electronically. If the Manager does not already have the Custodian’s online system in its operations group, the Manager should contact the Custodian’s investment manager services area.

In addition to the Manager’s contacts at the Investment Manager Services area of Custodian, all the Manager’s operations personnel involved with the reconciliation process should be given the name of PRIM’s client service officer at Custodian (PRIM will supply the name, telephone number and email address of this individual to the Manager). The supervisor of the Manager’s operations area should call or email this individual immediately with the names of the Manager’s operations personnel who work on the PRIM reconciliation, a description of their roles, and their telephone numbers.

Payment of the Manager’s fee is shall be contingent upon the Manager reconciling with the Custodian as provided above.

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ATTACHMENT 1

PRIMPUBLIC MARKETS INVESTMENT MANAGER

MONTHLY RECONCILIATION SCHEDULE

First business day:PRIM sends expense accrual information to Custodian for input.

Second business day: Custodian sends preliminary net asset value data to publicmarkets managers via online system or other electronic means (Available the morning of third business day).

Third business day: Public markets managers perform preliminary reconciliation of net asset value using summary data on online system.

Fifth Business day: Public markets managers complete and return to Custodian preliminary reconciliations of net asset value as per Attachment 2.

Seventh business day: Public markets managers and Custodian resolve any discrepancies, as per Attachment 2. Public markets managers complete and return to Custodian Attachment 5, Monthly Performance Report.

Eighth business day: Custodian mails final reports to Investment Managers Custodian Accounting delivers final reports to Custodian

Performance and Analytics.

Eleventh business day: Public markets managers and Custodian complete final performance reconciliation. Public markets managers advise PRIM by fax that both the final account reconciliation and the performance report are complete.

Twelfth business day: Custodian Analytics issues final performance reports.

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ATTACHMENT 3

METHODOLOGY DIFFERENCES

I. Pricing

The Manager should address questions regarding pricing challenges to PRIM’s Client Service Officer at the Custodian.

II. Amortization.

Custodian uses straight line amortization on all zero coupon bonds.

III. Trade date vs. settlement date accounting.

Custodian reflects all holdings as of trade date.

IV. Exchange rates.

Custodian uses RT12 (Reuters 12 Noon London time, last trading day of the month) exchange rates to establish the dollar price of non-dollar securities.

V. Posting of dividends and interest.

Custodian reflects dividend and interest income as of ex-date.Custodian accrues interest income daily based on the parameters of the fixed income instrument.

VI. Computation of realized gain and loss.

Custodian calculates the average cost of each security in the portfolio and uses this as a basis from which to compute the realized gain or loss on the position.

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ATTACHMENT 4

PENSION RESERVES INVESTMENT MANAGEMENTMonthly Performance Information

TO: [Custodian] PHONE#:FAX#:

FROM: Phone#:

COMPANY: Fax#:

SSB FUND:

MONTH:Prior Current

Month MonthMonth End Market Value:Net Cash Flow (Contributions/Withdrawals)Portfolio Management Fee

Investment Results:

Rate of ReturnGross of Fees

Rate of ReturnNet ofFees

Current MonthYear to Date

Comments (Major Flows, Corrections to prior month values or returns):

THIS COMPLETED DOCUMENT MUST BE RECEIVED BY CUSTODIAN NO LATER THAN THE END OF THE SEVENTH BUSINESS DAY AFTER MONTH END, IN ORDER FOR RECONCILIATION TO BE COMPLETE.

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SAMPLEINVESTMENT MANAGEMENT AGREEMENT

(Hedge Fund Manager)

THIS INVESTMENT MANAGEMENT AGREEMENT (this “Agreement”), dated as of_____, is made by and among ___LLC, a Massachusetts limited liability company (the “Company”), ______ (the “Manager”), and Cliffwater LLC, (the “Consultant”).

1. Introduction. The Company is a wholly owned subsidiary of ___LLC, a Massachusetts limited liability company (the “Member”). The Member is, in turn, a wholly owned subsidiary of the Pension Reserves Investment Trust Fund (“PRIT”), for which the Pension Reserves Investment Management Board (“PRIM”) serves as Trustee. PRIT has been established for the purpose of depositing, investing and disbursing amounts set aside to meet certain liabilities of various public retirement systems in Massachusetts. Under Massachusetts General Laws, Chapter 32, Section 23, PRIM has general supervision of the investment and reinvestment of PRIT created by Chapter 32, Section 22 of such laws. PRIT has formed the Member, and the Member has formed the Company, for the principal purpose of conducting the business of investing and reinvesting certain assets of PRIT. Pursuant to PRIM’s authority under Massachusetts General Laws, Chapter 32, Section 23, subdivision (2A), paragraph (e), clause (iii), PRIM has caused the Member to cause the Company to enter into this Agreement. The Company operates under a limited liability company agreement (the “Operating Agreement”), a copy of which is attached hereto as Exhibit 1. Initially capitalized terms used in the body of this Agreement without definition have the meanings set forth in the Operating Agreement. The Manager acknowledges that, pursuant to the Operating Agreement, the Member has the sole authority to act for and bind the Company with respect to its rights under this Agreement.

2. Appointment of the Manager. The Company hereby appoints and retains the Manager, and the Manager agrees to serve as manager of the Company, upon and subject to the terms of this Agreement, beginning at the opening of business on ______ (the “Effective Date”) and continuing until this Agreement is terminated in accordance with its terms. The Manager hereby accepts appointment as manager of the Company and agrees to provide services to the Company in accordance with (a) this Agreement, (b) the Operating Agreement, and (c) the investment objectives and investment guidelines set forth on Schedule A hereto (as amended from time to time, the “Investment Objectives and Guidelines”). In connection herewith, the Manager has executed and delivered to the Member a counterpart signature page to the Operating Agreement, which Operating Agreement may be amended from time to time in accordance with its terms by mutual agreement of the Manager and the Member.

3. The Portfolio. The responsibilities and duties of the Manager are limited to the portfolio of the Company. The Member has determined that the approved level of initial funding for the Company shall be _____,which amount will be contributed to the Company by the Member on _____. From time to time, upon thirty (30) days prior written notice to

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the Manager, the Member may withdraw any assets from the Company. The Member acknowledges that, to the extent it seeks to withdraw assets in kind, Investments (as defined below) may be subject to limitations on transfer and, to the extent that it seeks to withdraw cash, Investments may not be able to be liquidated within such thirty (30) day period. Nothing in this Agreement will constitute a commitment by the Member to maintain any minimum amount of assets in the Company and a reduction or diminution in the assets of the Company (by virtue of withdrawals, depreciation or otherwise) will not be considered a termination under the terms of this Agreement.

4. Investment Objectives and Guidelines. The Manager shall construct a portfolio on behalf of the Company, consisting of all of the Company’s assets, and will have the full responsibility to invest and reinvest the Company’s assets in (a) the securities of private investment entities that are not registered under the Investment Company Act of 1940, as amended, and (b) cash, cash equivalents and short-term fixed income investments (with respect to both clauses (a) and (b), each, an “Investment,” and collectively, the “Portfolio”) in accordance with the Investment Objectives and Guidelines and the Operating Agreement and all applicable laws and regulations. The Investment Objectives and Guidelines may be modified from time to time by the Member on behalf of the Company, upon at least thirty (30) days’ prior written notice to the Manager, provided that if within five (5) days of such notice the Manager elects to terminate this Agreement in accordance with Section hereof, the change will not be effective until ninety (90) days following such notice of termination. Subject to such guidelines, the Manager shall use its reasonable best efforts to increase the value of the Company by causing the assets of the Company to be invested and reinvested from time to time, provided that for the avoidance of doubt the Manager does not guarantee increasing the value of the Company, and such value may decrease.

5. Discretionary Authority. In carrying out its responsibilities as manager, and subject to this Agreement, the Operating Agreement and the Investment Objectives and Guidelines, the Manager will have full and complete discretion to direct and manage the investment and reinvestment of the Company’s assets with full and exclusive power and authority to (a) cause the Company to buy, sell, exchange, convert and otherwise trade in cash and cash equivalents as the Manager may select, (b) establish, maintain and deal through accounts with one or more securities brokerage firms on behalf of the Company as the Manager may select, and (c) cause the Company to invest in investments and to manage Investments and the Portfolio as the Manager may determine. In connection with the foregoing authority, the parties hereto acknowledge that, under the terms of the Operating Agreement, the Manager has the power to execute any and all agreements, certificates, statements, instruments and documents and to take any and all actions as the Manager may deem necessary or appropriate in connection with the acquisition, sale or ownership by the Company of any Investments or to otherwise carry out its responsibilities and to implement the terms of this Agreement, provided that the Manager shall not be permitted to make representations about the Company other than (a) the representations described on Schedule B attached hereto, (b) any representations or acknowledgements regarding the Investment that confirm a matter or action performed by the Manager on behalf of the Company within the scope of its duties hereunder or

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under the Operating Agreement (such as representations that the Company has reviewed appropriate materials and understands the risks of the Investment), or (c) any additional representations approved in writing by the Member.

6. Statement of Account; Reports; Valuation. The Manager shall keep accurate, full and complete books and records relating to the transactions it effects on behalf of the Company for a period of at least seven years (or longer as required by applicable law) and will provide the information set forth on Schedule C hereto to the Company at such times as is required under such Schedule C; provided, however, that any Confidential Investment Information (as defined in Section 8 below) shall be provided separately to the Consultant pursuant to the terms of Section 8. The Manager shall also furnish to the Company or, with respect to any Confidential Investment Information, the Consultant, such additional reports or information with respect to the Portfolio as the Company shall reasonably request from time to time and shall work with the Company and/or the Consultant to establish an appropriate system intended to protect the Confidential Investment Information. At the end of each calendar quarter, the Manager will provide to the Company a compliance report as described on Schedule D hereto (the “Manager Compliance Report”). The Manager shall also from time to time, but no less than semi-annually, attend meetings (which, in the Company’s sole discretion, may be by telephone conference) with representatives and agents of PRIM to discuss the Investments, the Portfolio and the investment outlook. The Manager shall furnish to the Member and/or PRIM necessary assistance in the preparation of all reports relating to the Company and its Investments now or hereafter required by applicable law or otherwise. The Manager shall annually provide PRIM with all information necessary to update such representations made in the Manager's response to PRIM's Request for Proposals as may be mutually agreed.

The Manager shall be responsible for reconciliation of the Investment and cash accounts of the Company to third parties (hedge fund managers, any custodian, etc.), on a monthly basis, and shall promptly notify the Company of all unresolved differences.

During and after the term of this Agreement, at the request of the Company, the Manager shall make available its books, records and other applicable documents, solely with respect to the Company, to be inspected by representatives or agents of any PRIM Party (as defined in Section 7 below) or the Consultant at any reasonable times during the business hours of the Manager. The scope of such review shall be as determined by the Company.

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The Manager shall promptly notify the Company in writing of (1) any change in the Manager’s representations in this Agreement during the term of this Agreement; (2) any change or anticipated change (to the extent practicable) in the senior management and key investment professionals, (including but not limited to those named in Section 17(b) as amended and in effect from time to time) or material changes in ownership of the Manager’s organization; (3) any change or anticipated change (to the extent practicable) in the senior Portfolio management team charged with the management of the Portfolio; (4) any material change or anticipated material change in approach to the management of the Portfolio; (5) any other material change or anticipated material change in the Manager’s business activities or circumstances, including material changes affecting the Manager’s equity capital or liabilities and changes likely to have a material adverse impact on the Manager's ability to provide the services contemplated hereunder; (6) any action taken or expected to be taken by the Manager that is contrary to or inconsistent with this Agreement or the Operating Agreement, including the Investment Objectives and Guidelines; (7) the commencement by any governmental, regulatory or law enforcement agency of any investigation, examination or other proceeding directly involving the Manager, its owners, or employees (excluding any regular review or audit); and (8) the commencement of any civil suits involving (a) the Manager, (b) its owners if such suit affects or relates to the Manager, or (c) to its knowledge, its key investment professionals at a level of Vice President or higher involved with the management of the Portfolio.

The value of the Company and the Portfolio will be determined by the Manager, at a minimum, on a monthly basis based on the valuation methodology and procedures set forth on Schedule E attached hereto, which methodology and procedures shall be in accordance with GAAP.

In its capacity as “manager” of the Company, the Manager shall cause to be prepared and delivered to the Member each of the reports and statements detailed in Section 6.2 of the Operating Agreement within the time frames set forth therein.

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7. Confidentiality Obligations of Manager. The Manager will maintain in strictest confidence and shall not disclose, unless approved in writing in advance by the Company, any investment advice and/or information it furnishes to or receives from the Company, the Member, PRIT or PRIM (each a “PRIM Party” and together, the “PRIM Parties”) or the Consultant in connection with any PRIM Party’s business or strategy, this Agreement and its management of the Portfolio. The Manager will be permitted to disclose or communicate any information received from any PRIM Party or the Consultant or developed by the Manager under the terms of this Agreement only to the extent reasonably necessary to carry out the purposes of this Agreement or to the extent required by law and, in each case only (a) to the Company (subject to Section 8 below), (b) to the Consultant, (c) to such officers, employees and agents of the Manager to whom such disclosure or communication is necessary to carry out the purposes of this Agreement, provided that, prior to receiving any such disclosure, the recipient is notified of the confidential nature of such information and in any case the Manager shall be responsible for any breach of confidentiality by such recipient or (d) to such governmental authority or agency as may be required by law. Before making any disclosure or communication required by law, the Manager, unless prohibited by law, shall notify the Company and the Member of the information to be disclosed or communicated and the party to whom that information will be disclosed or communicated, and, if the information has been provided by the Consultant, shall also notify the Consultant in the same manner. In each case, such prior notice shall be given as promptly as possible to permit the Company and the Member to take reasonable action, and in each case to the maximum extent reasonably appropriate, the Manager shall request that the information be kept confidential by the recipient. The terms of this paragraph shall not be interpreted to prevent the Manager from providing investment advice to other clients who share comparable or different investment objectives with the Company, or to prohibit the Manager from using the Manager’s investment experience or performance with respect to the Portfolio on an undisclosed basis for use in composite performance presentations and reporting. The Manager shall not use the name of any PRIM Party or the Consultant, or otherwise disclose the existence of this Agreement or the relationship contemplated herein, in any documents, marketing materials or other communications, reports or statements without the Company’s and, if applicable, the Consultant’s prior written consent, unless otherwise required by law. Notwithstanding the foregoing, the Manager may disclose the identities of any PRIM Party and the Consultant, copies of the Operating Agreement and the existence of this Agreement to any Investment Fund (and its officers, employees and agents, including attorneys and accountants) in connection with an actual or proposed Investment therein, provided that such information and materials are provided with an expectation of confidentiality. Upon termination of this Agreement, the Manager shall promptly on request destroy or return to the Company (subject to Section 8 below) all confidential material relating to the Portfolio and any copies thereof, except that the Manager may retain copies of such material to the extent required by law. The Manager’s obligations with respect to confidentiality set forth herein shall survive the termination of this Agreement.

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8. Confidential Investment Information. The Manager agrees and understands that any and all information provided to any PRIM Party in written or electronic form shall be maintained by such PRIM Party in the same manner that it treats other confidential information pursuant to its internal procedures, but that such information may be public records available to the media and the public. The PRIM Parties acknowledge that public disclosure of certain information that may be required by the provisions of this Agreement or would otherwise be provided by the Manager may decrease the value of the Company’s Investments, and potential public disclosure may make certain potential Investments unavailable to the Company. As a result, all parties hereto agree that certain information provided by the Manager to the PRIM Parties shall be treated in the manner set forth in this Section 8, Section 9 and Section 10 below. The types of information requiring confidentiality (“Confidential Investment Information”) shall be set forth on Schedule F hereto, which may be amended from time to time by mutual agreement of the Manager and the Company. The Manager is authorized and directed to provide any and all Confidential Investment Information to the Consultant, and not to provide such information to the Company or to any other PRIM Party. Further, the Manager is authorized on behalf of the Company to enter into confidentiality agreements in connection with any Investment providing for any Confidential Investment Information to be provided directly to Manager, provided, that any such agreement shall reflect the provisions of this Agreement as to the circumstances and terms under which Confidential Investment Information is provided to the Consultant and to the PRIM Parties.

9. Confidentiality Obligations of Company. The Company will maintain in strictest confidence and shall not disclose, unless approved in writing in advance by the Manager, any information regarding specific Investment Funds that it receives from the Manager in connection with this Agreement. The Company will be permitted to disclose or communicate any information received from the Manager under the terms of this Agreement only to the extent necessary in connection with the fiduciary duty of any PRIM Party, to the extent reasonably necessary to carry out the purposes of or enforce this Agreement or to the extent required by law. Before making any disclosure or communication required by law, the Company, unless prohibited by law, will notify the Manager of the information to be disclosed or communicated and the party to whom that information will be disclosed or communicated.

10. Confidentiality Obligations of Consultant. The Consultant will maintain in strictest confidence and shall not disclose the advice and information that it furnishes to or receives from the Manager or any PRIM Party, and shall not use the information that it receives from the Manager with respect to the Investments or the Portfolio for any purpose other than that contemplated by this Agreement. The Consultant will be permitted to disclose or communicate any information received from any PRIM Party or the Manager under the terms of this Agreement only to the Manager, the PRIM Parties, and to such officers, employees and agents of the Consultant to whom such disclosure or communication is necessary to carry out the purposes of this Agreement or as required by law, provided that any such officers, employees and agents shall have been notified of the confidential nature of the information and in any case the Consultant shall be responsible for any breach of confidentiality by any such officers, employees and agents.

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Before making any disclosure or communication required by law, the Consultant, unless prohibited by law, will notify PRIM and the Manager of the information to be disclosed or communicated and the party to whom that information will be disclosed or communicated. The terms of this paragraph shall not be interpreted to prevent the Consultant from providing advice to other clients who share comparable investment objectives with the Company, or to prohibit the Consultant from using the Company’s investment experience or performance on an undisclosed basis for use in composite performance presentations and reporting; provided that for the avoidance of doubt such presentations and reporting shall not disclose the identity of any of the Investments comprising the Portfolio. The Consultant shall not disclose any Confidential Investment Information to any PRIM Party except: (a) the Consultant may provide to any PRIM Party summaries of and recommendations with respect to, any Confidential Investment Information in a composite or other form that does not reveal the confidential aspects of such Confidential Investment Information; (b) authorized employees and agents of any PRIM Party may inspect any Confidential Investment Information at the offices of Consultant from time to time, provided that such persons shall not be permitted to take or retain copies of any such Confidential Investment Information; (c) the Consultant may (and shall be required to) provide all such Confidential Investment Information to any successor consultant designated by the Company as set forth below; and (d) upon thirty (30) days prior notice to the Consultant and the Manager, the Company may require that all Confidential Investment Information be provided to the Company for delivery to PRIM, except that the Consultant may retain copies of such material to the extent required by law, rule, regulation or legal process (including those documents and other information or data that may be contained in an archived computer system backup made in accordance with such party’s data retention, security and/or disaster recovery procedures).

At any time during the term of this Agreement, the Company may, without the consent of the Manager or any other party, designate a successor consultant to replace the Consultant hereunder (provided that any such successor consultant shall execute a counterpart signature page to this Agreement and agree to be bound by the terms hereof) and this Agreement shall be deemed to be automatically amended to reflect the replacement of the Consultant, provided that upon notice to the Company, the Manager may elect notwithstanding the provisions of Section 9 to deliver all Confidential Investment Information directly to the Company and shall not be obligated to provide information to the replacement Consultant hereunder unless the Manager consents to the selection of the replacement Consultant. If the Manager makes such election, the Consultant shall not deliver information to its successor as contemplated by clause (c) above.

11. Fees and Expenses. The Manager will be entitled to receive from the Company, as complete compensation for the services rendered hereunder, the fees set forth on Schedule F hereto (the “Fee Schedule”), which shall include a base fee component (the “Base Fee”) and a performance fee component (the “Performance Fee”). The Fee Schedule shall also set forth the expenses of the Company that will be reimbursed by the Company. When expenses are incurred on behalf of one or more clients of the Manager

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and its Affiliates, the Manager will allocate such expenses to the Company and such other clients equitably, generally in proportion to the dollars invested in the transaction giving rise to such expenses. The Fee Schedule may only be modified by mutual agreement of the parties in writing. The fees will be paid and reasonable expenses reimbursed by the Company at the times and in the manner specified in the Fee Schedule, and will be pro-rated from the Effective Date. The fees will be paid, reasonable expenses reimbursed and indemnification payments under Section 20 will be paid by the Company, solely out of available funds of the Company; provided that at such time as the Company has been dissolved or the Member has withdrawn substantially all of the assets from the Company, if there are any unpaid fees, indemnification payments or reimbursements, whether disputed or not disputed, owed by the Company to the Manager under the terms of this Agreement or the Operating Agreement the Manager may pursue a claim for such amounts against the Member, provided further that at such time as the Member has been dissolved or its assets substantially withdrawn, if there are any unpaid fees, indemnification payments or reimbursements, whether disputed or not disputed, owed by the Company to the Manager under the terms of this Agreement or the Operating Agreement, the Manager may pursue a claim for such amounts against PRIT.

In the event that the Manager enters into an agreement to perform or otherwise begins to perform comparable services for other clients with a comparable or smaller dollar level of assets and with comparable investment objectives and guidelines at a lower or more favorable fee schedule, the Manager will promptly notify the Company of such arrangements and offer to revise this Agreement to incorporate the more favorable fee schedule at the Company's option. For the avoidance of doubt, any such offer will enable the Company to elect to revise this Agreement to reflect all applicable fee and related terms to which the other client’s investment is subject, and not to elect only particular elements of such terms. Such disclosures may be made without the name of the client disclosed.

11. Services Not Exclusive. The services of the Manager and its personnel to be provided under this Agreement are not exclusive, and the Manager may provide similar services to others and engage in other activities, but the Manager will allocate such personnel and devote such efforts as are necessary for it to carry out its duties under this Agreement in accordance with all of the terms hereof. The Manager may give advice and take action in the performance of its duties with respect to any of its other clients which may differ from the advice given, or the timing or nature of action taken, with respect to the Portfolio, provided that the Manager adheres to its internal code of ethics and a policy of allocating investment opportunities (including both acquisitions and dispositions) to the Company over a period of time on a fair and equitable basis relative to its other clients. The Manager shall provide the Company a copy of its internal code of ethics (and notify the Company of any changes thereto). The Manager’s current allocation policy is attached to this Agreement as Exhibit 2. The Manager shall abide by such policy, and shall not change such policy without prior written notice to the Company. Nothing in this Agreement shall impose upon the Manager any obligation to purchase or sell for the account of the Company any security or other property which the Manager purchases or sells for its own account or the account of any other client. Notwithstanding the

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foregoing, or anything else to the contrary contained in this Agreement (including, without limitation, the Investment Objectives and Guidelines), the Manager shall not make any Investment, without the written consent of the Company, if the material terms of such Investment are less favorable to the Company than the material terms on which other clients of the Manager or its Affiliates, or collective investment vehicles managed by the Manager or its Affiliates, invest in the same Investment Fund on or after January 1, 2004, provided that for these purposes, all terms included in a side letter shall be deemed material. For the avoidance of doubt, only those of such material terms that reflect less favorable terms to the Company require the Member’s prior written consent.

13. Rights, Duties and Obligations. The Manager will have full responsibility to invest and reinvest the assets of the Company in accordance with the Investment Objectives and Guidelines, and in compliance with this Agreement, the Operating Agreement and all applicable laws and regulations. Subject to the Investment Objectives and Guidelines and the other terms and conditions of this Agreement and the Operating Agreement and all applicable laws and regulations, the Manager is hereby authorized, for and on behalf of the Company, to take any of the following actions and the Manager shall have the following rights, duties and obligations in connection hereunder:

to act as the manager of the Company as provided in the Operating Agreement;

to select Investments for acquisition or disposition, to negotiate such acquisition or disposition, and to close such transaction, and to perform all acts necessary or appropriate to effect the foregoing, including the execution of documents as manager and attorney-in-fact for the Company;

to furnish to the Company or, with respect to any Confidential Investment Information, the Consultant, all of the information required to be provided pursuant to the terms of Section 6 above;

to arrange for the cash balance in the Portfolio to be maintained in custody by a bank or other qualified custodian and to maintain any instruments evidencing the ownership of the Company's Investments that the Manager shall deem useful and appropriate in the management of the Portfolio;

to attend to legal matters in connection with the acquisition, management and disposition of the Investments by retaining appropriate counsel and taking or causing to be taken such acts as, in the reasonable and prudent judgment of the Manager and upon advice of counsel, are necessary or appropriate to comply, in all material respects, with all applicable laws, rules, and regulations in connection with the making, validity, or enforceability of the matters surrounding the acquisition, management, or disposition of the Investments; provided, however, that the Manager must promptly notify the Company of any litigation in which any PRIM Party is named as a defendant, and any litigation in which any PRIM Party is a plaintiff must be approved by the Company and, in addition, all counsel engaged by the Manager on behalf of any PRIM Party in any litigation shall be approved by the Company;

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to vote all proxies authorizing the voting of Investments held by the Company and to execute on behalf of the Company all consents, votes, and/or acknowledgements relating to the Investments;

to establish, maintain, and close bank accounts for the benefit of the Company and draw checks or other orders for the payment of monies, provided that such actions shall be taken only upon the authorization of two or more signatories of Manager personnel; and

to effect any and all of the foregoing on such terms and conditions as the Manager in its sole discretion may deem advisable and to take such other actions as the Manager determines to be appropriate to carry out the terms and provisions of this Agreement and to effectuate the desired Investments.

14. Persons Authorized to Act for the Manager. The Manager will from time to time certify to the Company the name of the person or persons authorized to act on its behalf and will give the Company a specimen of his, her or their signatures. Any person so certified will be an authorized representative of the Manager for purposes of this Agreement and his or her authority to act on behalf of the Manager will continue until notice to the contrary is given by the Manager and received by the Company.

12. Persons Authorized to Act for the Company. Each PRIM Party may from time to time designate any person or persons to act on its behalf in giving instructions, directions, notices or other communications to the Manager and will certify the name of such person or persons to the Manager and give the Manager a specimen of his, her or their signatures. The authority of any such person to act on behalf of the Company will continue until notice to the contrary is given by the Company and received by the Manager.

13. Representations, Warranties and Covenants by the Manager. The Manager represents, warrants and covenants that:

it is registered and in good standing as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), it agrees to maintain such status and to notify the Company immediately after (i) it receives notice from any governmental authority of its ceasing to have maintained such status, (ii) it receives notice that any governmental authority is investigating it (excluding any regular review or audit), or (iii) it has reason to believe that it is likely to cease to be a registered investment adviser;

it has completed, obtained or performed all other registrations, filings, approvals, authorizations, consents or examinations required by any government or governmental authority for the performance of the acts contemplated by this Agreement;

it will deliver documentation of compliance with Sections 15.1 and 15.2 annually or as the Company may reasonably request and that it has provided the Company with a true and complete copy of Part II of the Manager’s most recent Form ADV, or such other

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Manager Disclosure Statement (as required by Rule 204-3 under the Advisers Act not less than 48 hours prior to the execution of this Agreement);

there is no pending litigation, investigation or proceeding of or before any arbitrator or governmental authority or, to the knowledge of the Manager, threatened by or against the Manager or any of its employees which reasonably may have a material effect on the Manager’s ability to perform under this Agreement;

it will comply with all laws, regulations and rules applicable to it in its performance of its duties and obligations under this Agreement;

it is a “fiduciary” within the meaning of Chapter 32 of the Massachusetts General Laws with respect to the Company and the Portfolio; and

neither it, nor any of its affiliates, or any of their direct or indirect owners, employees, officers or principals will accept or receive any compensation of any kind (including referral, finders or brokerage fees, or any revenue or income sharing arrangement) (i) from any issuer or sponsor of an Investment, or any affiliate of any such person, or (ii) from any person other than the Company if such compensation arises in connection with making, maintaining or disposing of any Investment, except to the extent such compensation is credited for the benefit of the Company.

17. Termination. This Agreement may be terminated by the Company at any time upon written notice to the Manager of such termination, and by the Manager upon no less than ninety days (90) written notice to the Company, in each case effective as of the date set forth in such notice. Any termination of this Agreement shall be without payment of any penalty by the Company.

A pro rata determination of the Base Fees due under the Fee Schedule, if appropriate, will be made for any period in which this Agreement has been terminated in accordance with the Fee Schedule. Any Performance Fees accrued but unpaid at the termination of the Agreement will be payable in accordance with the established payout schedule as provided in the Fee Schedule, as if such termination date were the end of the applicable fiscal year. Notwithstanding the foregoing, in the event of the termination of this Agreement by the Company as a result of: (a) the Manager’s fraud, willful misconduct, negligence, or breach of this Agreement, the Operating Agreement or applicable laws or regulations or (b) in the event that either (1) _____ceases to be employed by the Manager or principally responsible for managing the Portfolio, or (2) any two or more members of the Manager's investment committee as of the date hereof ceases to serve on such investment committee during any 30-day period (in either case for any reason other than death or disability) (each, a “For Cause Event”), in addition to any damages due to the Company as a result of Manager’s actions, the Manager shall not be entitled to any additional compensation hereunder, including but not limited to any accrued or unpaid Base or Performance Fees. A termination of this Agreement by the Company that occurs more than 180 days after the Member and PRIM receive actual notice of the most recent For Cause Event shall not be considered to result from the For Cause Event.

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Upon notice of termination by the Company or the Manager for any reason or for no reason, the Manager shall not make any further Investments other than consummating any legally binding commitments that are unfunded as of the date of such termination. The Company may also at any time, without prior notice, direct the Manager to cease activity with respect to the Portfolio; provided, however, that all trades executed but not settled prior to such direction shall be settled. From and after the date of notice of termination through the final transfer in-kind or complete liquidation of the Portfolio, the Manager shall reasonably cooperate with the Company with respect to the transfer of the Portfolio in-kind or, at the Company’s option, the Manager may be required to liquidate the Portfolio (subject to and on the terms provided in the Operating Agreement). On the effective date of the termination of this Agreement (or as close to such date as is reasonably possible), the Manager shall provide the Company (subject to Section 7 above) with a final report containing the same information as is required in the monthly reports provided under Section 6 hereof and shall return to the Company or, if applicable, the Consultant, all records relating to the Company and the Portfolio, except that the Manager may retain copies of such material to the extent (and for the time period) necessary to effect the transfer or liquidation of the Portfolio as contemplated hereby or as required by law, rule, regulation or legal process (including those documents and other information or data that may be contained in an archived computer system backup made in accordance with such party’s data retention, security and/or disaster recovery procedures).

Notwithstanding anything to the contrary contained in this Section 17, the Company shall not be permitted to terminate this Agreement prior to the second anniversary of the Effective Date other than as a result of a For Cause Event. In the event that the Company does terminate the Agreement in violation of the preceding sentence, then to the extent the Portfolio is not liquidated prior to the effective date of the termination of this Agreement, the Company, the Member, and/or such other PRIM Party to whom any portion of the Portfolio is transferred in kind shall arrange for the orderly liquidation of all Investments in the Portfolio as soon as practicable but in accordance with their respective fiduciary responsibilities.

Notwithstanding the foregoing, Sections 7, 8, 9, 10 and 23 of this Agreement shall survive the termination of this Agreement, in addition to any other provisions of this Agreement that survive expressly in accordance with their respective terms; provided that Section 23 shall survive only until the earlier of the liquidation of the Portfolio and the end of the fifth full calendar quarter beginning after the termination of this Agreement.

18. Performance of Duties; Standard of Care; Fiduciary Status of the Manager and Chapter 268A. With respect to the performance of its duties and responsibilities hereunder, the Manager will comply with the Operating Agreement and all applicable laws and regulations, and the Manager will exercise the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent manager acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of like character and with like aims. The Manager further acknowledges that it is a “fiduciary”

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within the meaning of Chapter 32 of the Massachusetts General Laws with respect to the performance of its duties and responsibilities hereunder for the Portfolio. The Manager will discharge its duties and responsibilities under this Agreement in accordance with the fiduciary standards of conduct and other requirements as they apply to the Manager. The Manager is advised of the existence of Massachusetts General Laws, Chapter 268A (the Massachusetts “Conflict of Interest” statute), and is expected to act and perform its duties in accordance with such provisions. The Manager acknowledges that the Company has delivered a copy of Chapters 32 and 268A of the Massachusetts General Laws, as currently in effect, to the Manager.

19. Liability. At all times during the performance of, and in carrying out, its duties and obligations hereunder, the Manager shall be subject to the standard of care and fiduciary status set forth in Section 17 above. The Manager shall be responsible for the management of the Portfolio in accordance with this Agreement, the Operating Agreement, the Investment Objectives and Guidelines and with such other reasonable instructions as the Company may provide from time to time. Notwithstanding any terms of the Operating Agreement to the contrary, the Manager shall not be liable for the selection of the Investment Objectives and Guidelines and the Manager shall not be subject to liability for any of its or its employees' or agents' act, omission or error of judgment (including any loss arising out of an Investment) in the course of, or connected with, the performance of its duties and responsibilities hereunder, except to the extent arising from its own negligence, fraud, lack of good faith or willful misconduct, or breach of this Agreement, the Operating Agreement or applicable laws or regulations. The Manager shall have no responsibility whatsoever for the management of any assets of any PRIM Party other than the Portfolio, and the Manager shall have no duty, responsibility, or liability in connection with the operation or the administration of any PRIM Party other than the Company. Nothing herein shall be construed to waive any liability that the Manager has under applicable laws, including, without limitation, federal or state securities laws and the Massachusetts General Laws.

20. Indemnification. The Manager shall indemnify and hold each PRIM Party harmless from and against any and all claims, liabilities, losses, damages, costs, expenses (including reasonable attorneys’ fees) and causes of action incurred by any such PRIM Party which may arise as a result of negligence, fraud, lack of good faith or willful misconduct, or a breach of this Agreement, the Operating Agreement or applicable laws or regulations on the part of the Manager or its members, shareholders, directors, officers, agents or any other person acting on behalf of the Manager in connection with the performance of its duties hereunder; provided that for the avoidance of doubt the Manager does not guarantee the performance of the Portfolio or that the value of the Portfolio will not decrease. The Manager agrees that it shall be liable for the reasonable attorneys’ fees incurred by any PRIM Party in connection with the enforcement of the obligations of the Manager hereunder if the Company or any such PRIM Party is the prevailing party in any such action.

The Company shall indemnify and hold the Manager harmless from and against any and all claims, liabilities, losses, damages, costs, expenses (including reasonable attorneys’

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fees) and causes of action incurred by the Manager resulting from any action, suit, proceeding or claim against the Manager by a party other than a PRIM Party that may arise as a result of the Manager serving or having served as “Manager” under this Agreement or the Operating Agreement (a “Third Party Claim”). Notwithstanding the foregoing, the Company shall not indemnify the Manager for any such claims, liabilities, losses, damages, costs or expenses that may arise as a result of or in connection with any breach of any material term of this Agreement or the Operating Agreement, any breach of this Agreement or the Operating Agreement that materially affects the Company, the Portfolio or the rights of the Member, any breach of applicable laws or regulations, or negligence, fraud, lack of good faith or willful misconduct, in each case on the part of any of the Manager or its members, shareholders, directors, officers, agents or any other person acting on behalf of the Manager. The foregoing obligation is subject to compliance with the remaining terms of this Section 20.

Upon receipt by the Manager or any of its Affiliates, officers, employees or agents, of notice of a Third Party Claim, the Manager shall promptly provide written notice thereof (together with any related documentation received) to the Company, whereupon the Company shall have the right, at its option, to assume the defense of such Third Party Claim, at its own expense and with its own reputable counsel. If the Company shall undertake to defend any such Third Party Claim, it shall promptly notify the Manager of its intention to do so, and the Manager agrees to reasonably cooperate with the Company and its counsel in the defense against any such Third Party Claim. The Company shall not settle any such Third Party Claim without the prior written consent of the Manager (which consent will not be unreasonably withheld) unless the relief consists solely of money damages and includes a provision whereby the plaintiff or claimant in the matter releases the Manager from all liability with respect thereto. Notwithstanding an election to assume the defense of such action or proceeding, the Manager shall have the right to employ separate counsel and to participate in the defense of such action or proceeding, and the Company shall bear the reasonable fees, costs and expenses of such separate counsel if (a) the Manager shall have received a written legal opinion reasonably acceptable to the Company in form and substance that an actual or potential conflict of interest makes representation by the same counsel or the counsel selected by the Company inappropriate under applicable legal or ethical standards or (b) the Company shall have authorized the Manager to employ separate counsel at the Company’s expense (which authorization will not be unreasonably withheld). In any event, each party and its counsel shall cooperate with the other party and its counsel and keep such person informed of relevant developments relating to any such Third Party Claims, and shall provide copies of all relevant correspondence and documentation relating thereto, to the extent practicable under the circumstances. In any event, the Manager shall have the right at its own expense to participate in the defense of such asserted liability. In no event shall the Manager settle any such Third Party Claim without the written consent of the Company (which consent will not be unreasonably withheld). The Company agrees that it shall be liable for the reasonable attorneys’ fees incurred by the Manager in connection with the enforcement of the obligations of the Company under this Section 20 if the Manager is the prevailing party in any such action.

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For the avoidance of doubt, the Company's having invested in an underlying Investment Fund or the Manager having caused the Company or any other client of the Manager to have invested in an underlying Investment Fund shall not in and of itself cause the underlying Investment Fund or its manager or other service providers to be deemed an agent of or person acting on behalf of the Manager. This Section 20 shall survive any termination or expiration of this Agreement.

21. Authority. Each of the parties to this Agreement represents that it is duly authorized and empowered to execute, deliver and perform this Agreement, that such action does not materially conflict with or violate any provision of law, rule or regulation, contract, deed of trust, or other instrument to which it is a party or to which any of its property is subject, and that this Agreement is a valid and binding obligation, enforceable against such party in accordance with its terms.

22. Bonding. The Manager agrees to maintain during the term of this Agreement any fidelity bond with respect to the Portfolio that it would be required to maintain to satisfy Section 412 of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and the regulations thereunder if the Portfolio were subject to the terms of Part 4 of Subtitle B of Title I of ERISA, which fidelity bond shall be solely for the benefit of the PRIM Parties.

23. Insurance. The Manager agrees to carry at all times, and with companies acceptable to the Company, professional errors and omissions liability (which includes coverage for fiduciary matters up to the same limits, and which by its terms would generally provide coverage for claims relating to the Investment Manager’s failure to perform the services it has agreed to perform under this Agreement and the Operating Agreement, subject to standard limitations) with a combined single limit of not less than $10,000,000 per claim and $20,000,000 in the aggregate annually, and to use its reasonable best efforts to increase the amount of such coverage by such amounts as the Manager deems appropriate from time to time.

The Manager agrees to furnish to the Company certificates of insurance evidencing the specified coverages (including the fidelity bond) and will not materially change (other than to increase the level of coverage) or terminate any of such coverages without at least 30 days’ prior written notice to the Company. The Manager further agrees to notify the Company as soon as possible, and in any event within five (5) business days of when the Manager receives notice of any material change or termination of the specified coverages, of such notice.

24. “Soft Dollar” and Other Arrangements. On an ongoing basis (not less than annually) the Manager will identify and provide a written description to the Company of all “soft dollar” arrangements that it maintains with respect to the Portfolio or with brokers or dealers which execute transactions for the Company. Prior to the Effective Date, and periodically thereafter (not less than annually), the Manager shall provide the Company with a written description of all arrangements with third parties and other individuals, entities, brokers or money management firms who have or may receive or share in the payment of fees for services in connection with securing or continuing this

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Agreement. For the avoidance of doubt, the Company acknowledges that subject to Section 18, the Manager may cause the Company to invest with unaffiliated investment managers that utilize soft dollar arrangements (including arrangements outside the parameters of Section 28(e) of the Securities Exchange Act of 1934, as amended), and that this Agreement does not require the identification or description of such unaffiliated investment managers' soft dollar arrangements.

25. Communication. Any approvals, instructions, directions, notices or other communications (other than oral instructions described in this Agreement) pursuant to this Agreement will be transmitted by mail, overnight delivery service, facsimile or electronic transmission:

to any PRIM Party at:

Pension Reserves Investment Management Board84 State StreetBoston, Massachusetts 02109

with a copy to:Goodwin Procter LLPExchange PlaceBoston, Massachusetts 02109

to the Consultant at:

Cliffwater LLCMarina Towers4640 Admiralty Way, Suite 1101Marina del Rey, CA 90292

to the Manager at:

_____

Any party may change the address for notices or other communications to it by written notice to the other parties stating the new address. Notices from any party to any other party will be effective when received by the addressee.

26. Integration of Agreements. This Agreement replaces and supersedes any and all agreements previously entered into with the Manager and any of its affiliates or predecessors. This Agreement incorporates the terms of the Operating Agreement by reference in its entirety. In the event of a conflict between the provisions of this Agreement and the terms of the Operating Agreement, the provisions of this Agreement shall prevail. This Agreement is not intended to replace, supercede or amend any other

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agreements or contracts between the Consultant and any PRIM Party; provided, however, that, to the extent there is a conflict between the provisions of this Agreement and the terms of any other such agreement or contract, the provisions of this Agreement shall prevail.

27. Assignment; Amendment; Waiver. The Manager will not assign this Agreement (including, without limitation, any “assignment” within the meaning of the Advisers Act) without the prior written consent of the Company. This Agreement constitutes the entire Agreement of the parties with respect to its subject matter and may only be amended by a written amendment signed by each of the parties (except for an amendment related to the Company’s naming of a successor consultant pursuant to the terms of Section 9 hereof). If any party hereunder fails to enforce any terms of this Agreement, failure to enforce on that occasion shall not prevent enforcement on any other occasion.

28. Headings; Attachments. Headings are for convenience only, and the text of this Agreement will govern the rights and obligations of the parties. Each of the Schedules and Exhibits attached hereto are an integral part of this Agreement and are incorporated herein by reference. Capitalized terms used in any Schedule or Exhibit have the same meaning as in this Agreement.

29. Resolution of Disputes. With respect to any controversy or dispute arising out of this Agreement, interpretation of any of the provisions hereof, or the actions of the Manager, the Company or the Consultant hereunder, each of the parties consents to the non-exclusive jurisdiction of all of the federal and state courts in the Commonwealth of Massachusetts, agrees that venue with respect to any action in such Commonwealth shall lie exclusively in Suffolk County, Massachusetts, and waives any defense of forum non conveniens; provided, however, that at the sole election of the Company, any such controversy or dispute shall be submitted to arbitration before the American Arbitration Association under the Commercial Arbitration Rules then obtaining of said Association, such arbitration to be held in Boston, Massachusetts, and judgment upon any award thus obtained may be entered in any court having jurisdiction thereof. In any such arbitration, each party to the arbitration shall bear its own expenses, including expenses of attorneys, financial experts and other witnesses; any arbitration fees and expenses of the arbitrators shall be divided equally between the disputing parties, except as otherwise provided in Section 20 of this Agreement. Service of process on either party shall be deemed effective if made by registered mail or by hand to the addresses listed for the giving of written as set forth in this Agreement.

30. Massachusetts Law. This Agreement will be considered to be an instrument made under seal in the Commonwealth of Massachusetts and it will be construed and the rights and obligations of the parties determined in accordance with the laws of said Commonwealth, without giving effect to conflicts of law principles.

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

_____LLC

By: PRIT ABSOLUTE RETURN

HOLDINGS LLC, as its Member

By:___________________________ Name: Title:

Manager Name

By:_____________________________Name:Title:

Cliffwater, LLC

By:_____________________________Name:Title:

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EXHIBIT 1

COMPANY OPERATING AGREEMENT

[Provided by PRIM]

100

EXHIBIT 2

MANAGER’S ALLOCATION POLICY

[Provided by Manager. ]

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SCHEDULE A

INVESTMENT OBJECTIVES AND GUIDELINES

I. Investment Objectives

To be determined

II. Investment Guidelines

Portfolio Guidelines

To be determined

Diversification Guidelines:

To be determined

Strategies

Specific Strategy Allocations to be determined

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SCHEDULE B

PERMITTED REPRESENTATIONS

In Subscription Agreements for investments in Funds, the Manager is hereby authorized to make representations in the name and on behalf of the Company to the following substantive effect:

a. The Company is fully aware that the offering and sale of interests in the Fund will not be registered under the Securities Act of 1933, as amended (the “Securities Act”), or any applicable securities laws of any states or other jurisdictions and have been made in reliance upon federal and state exemptions for transactions not involving a public offering. In furtherance thereof, the Company is an “accredited investor” as such term is defined in Rule 501(a) of Regulation D under the Securities Act.

b. The Company is fully aware that the Fund will not be registered as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”). In furtherance thereof, the Company is a “qualified purchaser” (as defined under the Investment Company Act).

c. The Company is a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act).

d. The Company is wholly-owned directly or indirectly by one or more “governmental plans” within the meaning of Section 414(d) of the Internal Revenue Code of 1986, as amended (the “Code”), and Section 3(32) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).

e. The Company and its beneficial owners are U.S. Persons for purposes of Regulation S under the Securities Act of 1933, the Commodity Exchange Act and U.S. tax law.

f. In connection with the Fund’s anti-money laundering compliance efforts, assets of the Company are not derived from or related to, any activity that is deemed criminal under United States laws, rules or regulations and that investment by the Company in such Fund is not prohibited by any applicable anti-money laundering laws (such as that the Company and its beneficial owners are not on the List of Specially Designated Nationals and Blocked Persons maintained by the U.S. Treasury Department’s Office of Foreign Assets Control, as such list may be amended from time to time) and that the Company complies with all applicable anti-money laundering laws.

g. The Company is eligible to participate in "new issues" under the general exemption set forth in NASD Rule 2790(c)(8).

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h. The Company is a limited liability company organized under the laws of the Commonwealth of Massachusetts, USA, which is wholly owned by PRIT Absolute Return Holdings LLC, a limited liability company organized under the laws of the State of Massachusetts, USA, which is in turn wholly owned by the Pension Reserves Investment Trust Fund (“PRIT”) and may in the future also be owned by additional instrumentalities of the Commonwealth of Massachusetts or wholly owned subsidiaries of such instrumentalities.

i. PRIT is a state government benefits plan subject to state regulation that is a US entity exempt from United States Federal taxation but subject to applicable laws governing a state pension plan.

j. The Company will be disregarded for United States Federal taxation purposes.

k. The Company is not subject to Title I of ERISA and is not a plan described in section 4975(e)(1) of the IRS Code.

The Company will notify the Manager promptly if any of these representations are untrue at any time, and the Manager may seek written approval from PRIM to make additional representations from time to time.

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SCHEDULE C

INFORMATION AND REPORTING REQUIREMENTS

Manager will provide the following information promptly (or upon the indicated schedule) to PRIM and/or the Consultant as indicated in the chart below.

PRIM ConsultantRequested at Any Time by PRIM or Provided When Relevant

Ability to ask about exposure to any holding at any given time - response within 2 business days

Y Y

Periodic educational "sessions" Y YOpportunity to accompany employees on visits to managers of Investment Funds

Y N/A

Studies or educational sessions on specific hedge fund strategies

Y N/A

3 to 5 "opinions" per year on single managers that PRIM may be evaluating for a direct program

Y N/A

Discussion of rationale for inclusion of manager in portfolio

Y Y

Experience and age of the manager of an Investment Fund Y YManager overview Y YWhich asset classes will be used Y YA summary of any "blow-ups" or newsworthy events affecting the Manager, Portfolio or to Manager's knowledge any of the Portfolio's underlying Investment Funds or their managers.

Y Y

MonthlyOrganizational Information

A summary of any material organizational/staffing/ownership changes affecting the Manager, Portfolio or to Manager's knowledge any of the underlying Investment Funds or their managers.

Y Y

A summary of any litigation and/or regulatory action against the Manager, Portfolio or to Manager's knowledge any of the underlying Investment Funds or their managers.

Y Y

Manager Level Data Portfolio commentary Y YName of each underlying Investment Fund in the Portfolio Y YAllocation to each Investment Fund (as a % of Portfolio assets, estimated % of assets managed by the Manager, %

Y Y

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of assets under management of the Investment Fund (based on information provided by such Investment Fund))Returns and Volatility of each Investment Fund Y YBeginning and Ending Month NAVs of each Investment Fund

Y Y

Risk contribution of each Investment Fund Y YEstimated Balance Sheet Leverage of each Investment Fund - long, short, net, gross exposures

Y Y

VaR (95 & 99% Levels) of each Investment Fund Y YMarginal Y YIncremental Y YWhen corr=1 Y YNew/Material Additional Allocations and Amounts to relevant Investment Funds by the Portfolio or other clients (aggregated) other than ordinary course rebalancing

Y Y

Material Partial Redemptions and Amounts to relevant Investment Funds by the Portfolio or other clients (aggregated) other than ordinary course rebalancing

Y Y

Full Redemptions by the Portfolio or other clients (aggregated)

Y Y

Portfolio Level DataStrategy Breakdowns provided: Y YAt single strategy level - Including definitions of each strategy

Y Y

By market value and number of Investment Funds Y YCompared to Peer Group Benchmarks Y YSector Breakdowns (by market value) with respect to the following (based on information provided by underlying managers):

Y Y

Geography Y YIndustry Y YLiquidity Y YEstimated % of Illiquid / Difficult to Price Securities Y YSecurity Type (estimated and subject to frequent changes)

Y Y

Currency (estimated based on geographic breakdown) Y Y

Factor Risks Fixed Income and Equity Betas* of the Portfolio Y Y

Company Financial Data Company month-end NAV (within the time frame specified in the Agreement)

Y Y

Dollar value and % difference between prior month's 5th business day, estimated NAV and prior month's updated

Y Y

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estimated NAV

QuarterlyContribution to the total Portfolio return by each Investment Fund

Y Y

Stress test analysis* Y YBase Fee Calculation (within 5 business days following quarter-end and updated upon final NAV calculation)

Y N/A

Listing of Administrative Expenses of the Company (year-to-date) (within 30 business days following quarter-end)

Y N/A

Company Capital Account Statement (within 30 business days following quarter-end)

Y Y

A summary of the assets flowing into/out of other funds managed by the Manager

Y Y

AnnuallyCompany Audited Financial Statements Y YAmount of UBTI generated by the Company

* Details to be determined based on Portfolio characteristics

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SCHEDULE D

MANAGER COMPLIANCE REPORT

Compliance Certification

In addition to the requirements of Section 6 of the Agreement, as soon as practicable after the close of each calendar quarter:

1. the Manager shall certify to the Company in writing that (a) the Manager has not deviated from the Investment Guidelines set forth in the Investment Objectives and Guidelines, (b) the Manager has not deviated from the requirements of Massachusetts General Laws, chapter 32, section 23, concerning certain investments relating to South Africa, Northern Ireland and tobacco and (c) that the representations, warranties and covenants of the Manager contained in the Agreement remain true and correct; or

2. if the Manager is unable to provide the certification outlined above, the Manager shall provide the Company with a detailed written explanation of each deviation from the Investment Objectives and Guidelines, Massachusetts General Laws, chapter 32, section 23, and/or which representations, warranties and covenants are no longer true and correct, the reason therefor, and, if applicable, a proposal regarding correction thereof; and the Manager shall certify to the Company that, except as specifically provided, the Manager has not deviated from the Investment Objectives and Guidelines or Massachusetts General Laws, chapter 32, section 23 and such representations, warranties and covenants remain true and correct.

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SCHEDULE E

VALUATION METHODOLOGY AND PROCEDURES

To be determined.

109

SCHEDULE F

FEES

To be determined.

110

EXHIBIT C

Disclosure Forms

PRIM Disclosure Form

PERAC Disclosure Form

COMMONWEALTH OF MASSACHUSETTSPENSION RESERVES INVESTMENT MANAGEMENT BOARD

DISCLOSURE STATEMENT

FIRM: _________________________ADDRESS: _________________________

__________________________________________________

Firms seeking to provide investment management or consulting services (the “engagement”) to the Commonwealth of Massachusetts Pension Reserves Investment Management Board (“PRIM”) must complete a disclosure statement providing complete and accurate responses to the questions below. Firms selected to provide investment management or consulting services to PRIM have a continuing obligation to update responses to these questions, in writing, immediately upon any change to such responses. The questions in this Disclosure Statement should be read broad, and any perceived ambiguity should be resolved in favor of disclosure.

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Any questions concerning the disclosures required should be directed to the PRIM Board’s Executive Director.

1. Describe in detail your firm’s organization structure, and identify any controlling stockholders, parents, subsidiaries, affiliates, partners, general partners, or principals (all such individuals or entities hereinafter collectively referred to as the “firm.”)

2. Identify any relationship of the firm, its joint ventures, consultants, lobbyists, subcontractors, agents, or placement agents that relate in any way to the engagement.

3. Aside from the engagement, describe any services provided by the firm to PRIM.

4. Aside from the services described in response to question no. 3, above, describe any services provided by the firm to the Office of the Treasurer or any trust, board, commission or authority of which the Treasurer is a member or trustee. (A list of such entities is attached.)

5. Aside from the services described in response to question nos. 3 and 4, above, describe any services provided by the firm to the Commonwealth of Massachusetts or any of its political subdivisions.

6. Did or will the firm provide or share, agree to provide or share, or arrange to provide or share any compensation or benefit, direct or indirect, to any individual or entity for assisting the firm in:

a) obtaining the engagement; or,b) performing the services required by the engagement.

If the answer to question no. 6 is “yes,” provide for each the individual or entity

a) the name and address of such individual or entity;b) a description of the assistance provided; andc) the compensation or benefit.

7. Does the firm have any ongoing relationship, arrangement or agreement with any individual or entity with respect to sharing compensation for services to:

a) PRIM;b) any trust, board, commission, or authority of which the Treasurer is a member or

trustee; orc) Massachusetts or its political subdivisions?

If the answer to question no. 7 is “yes,” provide for each such individual or entity

a) the name and address of such individual or entity;b) a description of the relationship, arrangement or agreement; and,

112

c) the compensation shared.

Signed under the pains and penalties of perjury on this day of _________, 2006.

Name:

Title:

113

Treasurer’s Principal Boards, Commissions and Authorities

1) Finance Advisory Board – M.G.L. c.6, s97-8

2) State Comptroller’s Advisory Board – M.G.L. c.5A, s2

3) Investment Advisory Council – M.G.L. c.10, s5B

4) State Retirement Board – M.G.L. c.10, s18

5) State Lottery Commission – M.G.L. c.10, s23

6) Emergency Finance Board – M.G.L. c.10, s47

7) Board of Bank Incorporation – M.G.L. c.26, s5

8) Water Pollution Abatement Trust – M.G.L. c.29, s2

9) Pension Reserves Investment Management – M.G.L. c.32, s23(2A)

10) Massachusetts Convention Center Authority – Chapter 190 of the Acts of 1982 ss31-48

11) Alcohol Beverages Control Commission (ABCC) – M.G.L. c. 138

12) The Massachusetts School Building Authority (MSBA) – M.G.L. c. 70b

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PERAC Disclosure

Please obtain the PERAC disclosure form at the following website, fill it out, and submit together with the COMMONWEALTH OF MASSACHUSETTS PENSION RESERVES

INVESTMENT MANAGEMENT BOARD disclosure form:

http://www.state.ma.us/perac/forms/0803disclosurestatementim.pdf

115

EXHIBIT D

Please refer to Chapter 32 of the Massachusetts General Laws andChapter 268A Massachusetts Conflict of Interest Law at

www.mass.gov <http://www.mass.gov>

116

EXHIBIT E

Please refer to Excel performance spreadsheet attached.

117

pension reserves investment management board

Documents

pooled investment fund

board members

investment operations

investment earnings

investment committee

member prim board

prims investment managers

hedge fund consultant