MARCH 19,2009 ITEM: 8 SUBJECT: CONSENT TO ASSIGNMENT OF DELTA ASSET MANAGEMENT'S CONTRACT AND POSSIBLE BOARD ACTION

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1 MARCH 19,2009 ITEM: 8 Michael A. Perez, General Manager '"3 SUBJECT: CONSENT TO ASSIGNMENT OF DELTA ASSET MANAGEMENT'S CONTRACT AND POSSIBLE BOARD ACTION RECOMMENDATION That the Board consent to the assignment of the Delta Asset Management's large cap growth equity contract, and authorize the General Manager to sign the written consent on behalf of the Board. BACKGROUND Delta Asset Management (Delta) is one of the Board's longest-serving investment managers. The principals of Delta have been managing money for the Fund since 1978 when they were with Security Pacific lnvestment Managers. In November, 2004 Delta was purchased by Berkeley Capital Management (Berkeley), a privately owned investment management firm based in San Francisco. In a letter dated March 6, 2009, Delta has informed staff that M & I lnvestment Management Corp. (M&l), a subsidiary of Marshall & llsley Corporation (M&l Corp), a large regional Midwestern bank, has agreed to acquire Delta from Berkeley. Consummation of the acquisition is currently expected to occur sometime during this month, at which time Delta will become an operating division of M&l. Details of the acquisition, an assignment consent form, and further information about M&l are attached. DISCUSSION The change in ownership is a triggering event within the Board's contract with Delta Asset Management and therefore requires the Board's approval for the assignment of the contract. Delta has assured us that there will not be any changes to the investment process and philosophy they have employed since the inception of the firm. Carl Goldsmith and Marla Ryan, the two portfolio managers for the Fund's account, will become employees of M&l and will continue providing service to the Fund. None of the services provided to the Board will change as a result of this transaction. Staff believes that this transaction will be beneficial to both firms as well as indiscernible to its clients. Staff recommends that the Board approve the assignment. PCA has reviewed this report and concurs with Staff's recommendation. The Assistant City Attorney has approved it as to form. Daren C. Perlstein lnvestment Officer MAP: LG:TL:RR:DP Attachment Commemorating 11 0 years of service to our members

2 DELTA ASSET MANAGEMENT" Ill\,\lull ill tlcrhcl~~ (.~pj~.hl \I,~~.~:CI~CIII [.I.( March 6,2009 Tom Lopez Los Angeles Fire & Police Pension System 360 East Second Street, Suite 600 Los Angeles, CA Dear Tom. We are pleased to announce that Delta Asset Management is about to embark on an ownership change that we believe will be a strong positive for Delta's future. On March 3,2009, our owner, Berkeley Capital Management LLC, signed a definitive agreement to sell the Delta division to Marshall & Ilsley Corporation (M&I), a diversified financial services firm with over $60 billion in assets, headquartered in Milwaukee, Wisconsin. As with all of our past ownership changes, Delta will continue to operate essentially the same, with all of our portfolio management, trading, and client services based out of our Los Angeles office. Our new owner will fulfill the same role that past owners have, which is to provide operational support including HR, legal and compliance in addition to the added benefit of marketing support. We are particularly excited about the opportunity to partner with M&1 in their growth strategy for the M&I Wealth Management division. We will be joining M&I as employees as part of the transaction and we and other Delta professionals making the transition will have the opportunity beyond salary and bonus to participate and benefit from our growth as part of M&I. While Delta has benefitted from its association with Berkeley Capital Management over the last four plus years, we are excited about the opportunity to join with an owner where our large capitalization equity expertise will be complementary to their existing manager capabilities and will be valuable to M&l's efforts to grow the assets of its Wealth Management division. As such. we are asking for your consent to an assignment of your contract to our new owner in the following document. Pending the completion of certain closing conditions set forth in our definitive agreement, we are anticipating a March 3 1" transaction close and it is our hope that you are able to complete this approval as soon as possible and prior

3 DELTA ASSET MANAGEMENT" I),,.,,bC>,,,I! ll~.rlclc) ('aptl.tl \l.!n.tgcn~c~~l I.!.( to that date. We realize you may have additional questions regarding the transaction and we are available for any calls or meetings to assist you with this process. We have also enclosed a fact sheet that highlights pertinent information about M&I for your information. As with each ownership change in the past, Delta plans to maintain its culture and investment independence. We believe this transaction with a new strategic owner will not only allow us to achieve these objectives, but will also provide an opportunity for growth that will strengthen Delta's future. In this regard, both of us will be signing five year employment agreements in conjunction with this transaction. Thank you for your cooperation in this matter. We are grateful for having had the opportunity to serve you in the past and look forward to serving you in the future. Please don't hesitate to call either of us with any questions or concerns you may have. Kind Regards, Carl L. Goldsmith Chief Investment Officer (2 13) cgoldsmith~,berkeleydelta.com Marla K. Ryan Senior Vice President (2 13) mr~an@,berkeleydelta.com 2

4 DELTAASSET MANAGEMENT" March Tom Lopez Los Angeles Fire & Police Pension System 360 East Second Street, Suite 600 Los Angeles, CA Dear Tom, As we have discussed, we are pleased to report that M & I Investment Management Corp. ("M&I"), a subsidiary of Marshall & llsley Corporation ("M&I Corp"), has agreed to acquire the Delta Asset Management division ("Delta") of Berkeley Capital Management LLC ("Berkeley"). Upon consummation of the acquisition, which we currently expect to occur in March 2009, Delta will become an operating division of M&I. None of the services we provide to you will change as a result of the transaction. Nonetheless, the consummation of the transaction will constitute an assignment of our advisory contract with you and, pursuant to the terms of that contract, we are required to obtain your consent to its assignment to M&I. If you consent, your existing contract will continue in full force and effect after its assignment. As background information, the following is a brief description of M&l and its parent, M&I Corp. Founded in 1847, M&I Corp is a leading diversified financial services firm headquartered in Milwaukee, Wisconsin with $62 billion in assets, market capitalization of $I. 1 billion, 37 1 banking locations and more than 10,000 employees. M&I Corp provides a diversified range of financial services and products through two business divisions: Commercial & Community Banking and Wealth Management. The Wealth Management division provides trust and investment management, investment and financial planning, private banking, asset-based lending and insurance services. In addition, the Wealth Management division provides portfolio management for over $30 billion in assets under management ("AUM") and is the investment advisor for the Marshall Funds, M&I Corp's family of mutual funds, with over $9 billion in AUM. Additional information regarding M&l Corp and its Wealth Management division is included in an attachment to this letter. 1

5 Carl Goldsmith and Marla Ryan will become employees of M&I and will continue providing you service under your Contract, along with other dedicated professionals. To give your consent to the assignment of the Contract, dated as of October 1,2007, from Berkeley to M&I, please sign in the space indicated on both copies of the enclosed letter. Please return one original in the enclosed prepaid overnight envelope and retain one original for your records. We would greatly appreciate it if you would return your consent as soon as possible. If you have any questions, please do not hesitate to call either Marla Ryan at (2 13) or me at (2 13) Sincerely, Carl L. Goldsmith Chief Investment Officer Marla K. Ryan Senior Vice President The undersigned hereby consents to the assignment of its Contract, dated October 1, 2007, to M&I as a result of the transaction described above. Los Angeles Fire and Police Pension System Signature Name & Title: (Please Print) 2

6 Marshall & llsley Corporation O Marshall & llsley Corporation ("M&l Corp") is a leading diversified financial services firm headquartered in Milwaukee, Wisconsin with $62 billion in assets. f Mark F. Furlong serves as CEO and President of M&l Corp. *:* Founded in 1847, M&l Corp is one of the largest bank holding companies in the U.S., with 371 banking locations The banking offices are located throughout Wisconsin (193), Arizona (53), Indiana (32), Florida (34), Missouri (17), Minnesota (26), Kansas (15), and Nevada (1). In addition, M&l Corp provides investment management and other non-banking services from locations across the U.S. Q M&l Corp is a publicly traded company (NYSE: MI) with a market capitalization of $1.I billion and more than 10,000 employees. *:* M&l Corp provides a diversified range of financial services and products through two business divisions: Commercial & Community Banking and Wealth Management. *:* Commercial & Community Banking: M&l Corp's banking subsidiaries provide a full range of banking services to individuals, businesses and governments. Q Wealth Management: M&l Corp provides trust and investment management, investment and financial plannhg, private banking; asset-based lending and insura~ice sen/ices. O M&l Corp is well capitalized with a tangible equity ratio of 9.0% as of December 31, 2008 M&l Wealth Management Q Division headed by Kenneth C. Krei, Senior Vice President of M&l Corp *t Key business lines include: Q Asset Management provides portfolio management and research through M & I Investment Management Corp. ("M&lV), a registered investment advisor, with over $30 billion in AUM as of Q4 08. O Personal Trust Services provides management of personal trusts, estate planning and charitable gift planning; Institutional Trust Services provides management of employee benefit plans, Taft-Hartley plans, foundations and endowments. Combined AUA exceeded $1 00 billion as of Q4 08. *:* Cedar Street Advisors focuses on providing consulting, planning and personalized services to ultra-high-networth individuals and families. Q Private Banking provides personal and mortgage lending for high net worth individuals. *:* Brokerage and lnsurance provides broker-dealer services primarily to retail banking customers. O Capital Markets provides a full range of securities services, derivatives and foreign exchange. O Outsourcing Services provides technology and back office operations support for approximately 60 financial institutions. *:+ Wealth Management contributed 14% of M&l Corp's revenue as of FY 08. Q M&l Corp's family of mutual funds, the Marshall Funds, is advised by M&l, and has over $9 billion in AUM across 17 funds as of Q4 08. M&l Wealth Management offers products and services through various affiliates of Marshall & llsley Corporation. including Marshall & llsley Trust Company N.A.. M&l lnvestment Management Corp. M&l Financial Adv~sors. Inc. (member FINWSIPC, maintaining its principal offices at 111 E Kilbourn Ave., Milwaukee. WI , North Star Trust Company, and North Star Deferred Exchange. lnsurance coverage is underwr~tlen by a number of insurers, Insurance products are the obligation of the insurance company Marshall & llsley Corporation Investment products are Not FDIC Insured I No bank guarantee I May lose value GI Banking products and services are prov~ded by M&I Marshall & llsley Bank or M&I Bank FSB. Members FDIC. LENDE;I