The United States Department of the Interior (DOI), Office of Insular Affairs (OIA) solicits your qualifications for providing investment advice and consultation services for a Trust Fund for the People of the Federated States of Micronesia and a Trust Fund for the People of the Republic of the Marshall Islands. BACKGROUND Public Law 108-188 authorizes the creation of the two trust funds. Over the twenty years through 2023, Government of the United States will contribute $442 million to the trust fund for the Federated States of Micronesia (FSM) and $235 million to the trust fund for the Republic of the Marshall Islands (RMI). The RMI will contribute $25 million as soon as its trust fund is established and $2.5 million in each of the two subsequent years; the FSM will contribute $30 million by the end of this fiscal year (before October 1, 2004). Income will accumulate through the end of 2023. It is anticipated that $46 million will be available in fiscal year 2004 for the FSM trust fund, and $32 million for the RMI trust fund. After 2023, the income will aid in supporting the governmental activities of the FSM and the RMI. These activities are described in section 211 of the Compact of Free Association, as amended, relating to the FSM and section 211 of the Compact of Free Association, as amended relating to the RMI. Both amended compacts were approved in United States Public Law 108-188. For salient details please read the trust fund subsidiary agreements noted below and available on the web site of the Office of Insular Affairs (see URL citation below). The two trust funds will be incorporated separately in Washington, D.C. in the very near future. This RFI is intended to jump start the investment process. The responses to this RFI will be given to the two new Trust Fund Committees for their consideration as soon as each committee is established. At the discretion of each committee, action may be taken to employ the Investment Adviser based on the information received. REQUEST The Office of Insular Affairs (DOI) of the United States Department of the Interior is soliciting in this Request for Information (RFI) your qualifications for providing investment advice and consultation services for the Trust Fund for the People of the Federated States of Micronesia or the Trust Fund for the People of the Republic of the Marshall Islands if you were chosen to be the Investment Adviser for either or both trusts. Please respond specifically to each of the following requests: Organization and Services: 1. Provide a summary of the work of your firm and describe the overall financial strength of your company or parent company. Include the location of your organization's headquarters, depth of professional and support staff, year formed, ownership structure, primary contact person for this relationship, revenue generated from consulting services, and subsidiary or affiliate relationships. 2. How many analysts are employed by your organization who are responsible solely for investment manager research? How many analysts are responsible for performance evaluations, performance attribution analysis, manager evaluation, due-diligence, etc.? 3. Is your firm a registered investment advisor under the Investment Advisors Act of 1940? Can your firm provide fiduciary services for its clients? 4. Please provide a full list of consulting services offered by your firm. 5. Describe your "consulting philosophy" (i.e. your role as a consultant). Investment Policy and Guidelines: 1. Describe the process you will use to assist us in the development of the investment policy, objectives and guidelines for these trust funds. 2. How do see the role of our Trust Fund Committee in this process? 3. Outline the Trust Fund Committee's fiduciary responsibilities in managing the assets? How would you assist the Trust Fund Committee and Trustees in meeting their fiduciary responsibilities? 4. What process would you use to recommend an asset allocation strategy for these trust funds? What data is used in your asset allocation model? Manager Search/Database: 1. Please provide a detailed description of your firm's investment fund manager evaluation process. Does your firm sell any of its research to outside organizations such as other investment consulting firms or investment fund managers? If so, how do you control conflicts of interest? Is your database proprietary? Do you subscribe to an outside vendor? If so, provide the name of the vendor. 2. What qualitative factors do you evaluate when researching investment fund management organizations? How does your firm identify qualitative problems at investment fund management organizations? How is historical investment performance used in your evaluation of investment fund managers? How do you verify a manager's performance composite? 3. Does your investment fund manager research and evaluation process call for the use of subjective ratings of qualitative factors? If so, please provide a sample of an investment fund manager rating. Provide a breakout of how the overall rating is derived. 4. How many managers are included in your database? Are managers required to pay your firm either hard or soft dollar fees to be included in your database? If so, how do you control conflicts of interest? Besides performance information, what other types of data are available on your database? 5. Describe the circumstances under which you would terminate an investment fund manager. Performance Measurement: 1. Comment on your ability to provide performance measurement reports to suit the needs of the Trust Fund Committee. How frequently would you provide investment performance measurement reports to the Trust Fund Committee? Specifically, what types of exhibits would you use in a summary report that would be presented to the Trust Fund Committee? Please provide some examples. 2. Describe the performance measurement software your firm uses. Is the software proprietary, or does your firm utilize the software of an outside vendor? If your firm uses non-proprietary software, do you have the ability to influence changes to the software to meet the demands of the marketplace and client? 3. What other types of exhibits would you include in a detailed analysis of performance? 4. Please describe how you monitor the style adherence of investment fund managers. Specifically, what types of reports would you use? 5. Describe the performance attribution analysis services that you would provide. Additional Information: 1. Is your firm currently being, or has it within the past five years been, sued in a court of law for breach of fiduciary responsibility or for errors and omissions in the handling of client affairs? If so, please explain. 2. Can your firm, or an affiliate of your firm provide custodial and fiduciary services. 3. State what you believe distinguishes your consulting services from your competitors? Who are your competitors? What services can't your firm provide? 4. Please provide the compensation schedule you would require for the services proposed. Break out hard dollar fees and soft dollar fees. Do you bill separately for spontaneous service requests, telephone conversations, etc.? 5. Submit a list of client references. RELEVANT DOCUMENTS In order to properly respond to this RFI, interested parties must be conversant with the following documents - for the FSM: (1) Section 211, 215, and 216 of the Compact of Free Association, as amended, for the FSM, and (2) The agreement subsidiary to the Compact, as amended, relating to the FSM Trust Fund, and for the RMI: (1) Section 211, 216, and 217 of the Compact of Free Association, as amended, for the RMI, and (2) The agreement subsidiary to the Compact, as amended, relating to the RMI Trust Fund. These documents can be found at: www.doi.gov/oia/solicittrustfunds/documents.htm.
