CITY OF LOS ANGELES DEPARTMENT OF WATER AND POWER INTRADEPARTMENTAL CORRESPONDENCE

Date: August 10, 2010

To: Retirement Board Members

Froml1J; Sangeeta Bhatia Retirement Plan Manager

Subject: Board Agenda Item NO.8: Report on Organizational Changes at Pacific Alternative Asset Management Company (August 18, 2010, Special Retirement Board Meeting)

The Board of Administration (Board) of the Water and Power Employees' Retirement Plan (Plan) hired Pacific Alternative Asset Management Company (PAAMCO) to manage a fund of funds mandate in December 2006, with an initial funding of $33 million in February 2007. As of June 30, 2010, the market value of the account was $35.8 million. At the Regular Board meeting held on March 10,2010, the Board removed PAAMCO from watch status (Resolution No. 10-72).

Ms. Judy Posnikoff, Ms. Jane Buchan, Mr. Jim Berens, and Mr. Bill Knight founded PAAMCO, a $10 billion -of-funds company, in March 2000, in Irvine, California. The original PAAMCO founders owned 100% of PAAMCO until the beginning of 2005 when PAAMCO expanded its ownership to include five of the firm's senior professionals: Mr. Charlie Armendarez, Mr. Von Hughes, Mr. Alper Ince, Mr. Stephen Oxley, and Ms. Pattie Watters. Mrs. Watters left PAAMCO at the end of 2008 and gave back her partnership shares to the firm in accordance with the firm's Ownership Agreement. Mr. Philippe Jorion and Ms. Kemmy Koh became partners in 2009.

On July 1, 2010, as part of its ongoing plans to expand employee ownership of the firm, PAAMCO announced the promotions of Messrs. Mayer J. Cherem, Maarten Nederlof, Neale Safaty and Kevin Williams to partners of the firm.

Representatives from Pension Consulting Alliance (PCA) believe the partnership expansion should have a positive impact for the Plan. PCA and Staff will continue to closely monitor PAAMCO for additional organizational changes.

The following documents are attached:

• Email and Announcement from PAAMCO • Email from PCA

SB:JW:SV:AMM

8.1 Page 1 of 1

From: Dorothy Walsh [[email protected]] Sent: Wednesday, June 30, 2010 1:43 PM To: Wolfson, Jeremy Cc: Vargas, Scott; Mesa-Mahan, Ana Subject: PAAMCO Announcement

Follow Up Flag: Follow up Flag Status: Red Hi Jeremy,

I wanted to be the first to let you know about an exciting announcement that will be effective and will be made pUblic tomorrow. We've just promoted 4 senior professionals to partners of the firm. They are Kevin Williams, Maarten Nederlof, Neal Safaty and Mayer Cherem. We have produced a press release that will make the press tomorrow which I've attached.

If I don't talk to you before the weekend, enjoy the holiday! By the way, this is still confidential until tomorrow for whatever that's worth. It's practically the end of the day already.

Dorothy

************************************************ NOTICE: This e-mail and any attachments thereto, are intended only for use by the intended recipient(s) even if addressed incorrectly, and may contain legally privileged and/or confidential information. If you are not the intended recipient of this e-mail, you are hereby notified that any dissemination, distribution or copying of this e-mail, and any attachments thereto, is strictly prohibited. If you are not the intended recipient, please contact the sender immediately by reply e-mail and destroy all copies of the original message.

This message does not represent an offer to purchase or a solicitation of securities by Pacific Alternative Asset Management Company, LLC. Such an offer can only be made by obtaining appropriate offering documents. Any past performance provided is for illustrative purposes only and is not indicative offuture investment results.

8.2 file://N:\INVESTMENTS - MAIN FOLDER\OFFICERS\ANA MARIA\Board Reports\Staf... 8/312010 PACIFIC ALTERNATIVE ASSET MANAGEMENT COMPANY

For immediate release

PAAMCO Names Four New Partners

Recognizes Firm's Expertise in Risk Management, Investment Operations and Asian Investments

Irvine, California - July 1, 2010 - Pacific Alternative Asset Management Company, ("PAAMCO"), a US $10 billion fund of hedge funds company, today announced that Mayer J. Cherem, Maarten Nederlof, Neale Safaty and Kevin Williams have been promoted to partners.

"These appointments underscore PAAMCO's continuing commitment to excellence in due diligence, risk management and portfolio construction. These individuals have made significant contributions to our business as well as the disciplined investment process we implement to achieve superior risk adjusted returns for our clients," said Jane Buchan, Chief Executive Officer of PAAMCO.

Mayer J. Cherem is a Director and the Sector Specialist responsible for the evaluation and management of opportunistic investments and offensive risk management initiatives. He is also a member of the firm's Strategy Allocation Committee where he focuses on assessing the impact of asset allocation on overall portfolio risk and performance.

Maarten Nederlof is a Managing Director and Head of Portfolio Solutions at PAAMCO. He is a member of the Investment Management and Risk Management Committees and has twenty-four years of experience in investment management and portfolio construction with institutional investors.

Neale Safaty is based in PAAMCO's London office and is currently a Managing Director and a Sector Specialist for Hedging in the firm's Portfolio Management Group. Mr. Safaty is also responsible for the firm's Pan Asia Strategies' business and client relationships.

Kevin Williams is the Head of Investment Operations and is responsible for overseeing operational due diligence, legal and regulatory review, fund

8.3 accounting and administration and PAAMCO's managed account platform. In addition, Mr. Williams has led strategic business initiatives, manages certain institutional client relationships, and is a member of the firm's Investment Management and Account Management Committees.

About Pacific Alternative Asset Management Company ("PAAMCO") Pacific Alternative Asset Management Company ("RAAMCO") is a fund of hedge funds dedicated to offering strategic investment solutions to large, sophisticated institutional investors. Based in Irvine, California, PAAMCO was started in March 2000, and currently has approximately $10 billion under direct management. The firm's portfolio management team has both a strong academic background and years of experience in working with institutions and analyzing and creating multi­ strategy portfolios of hedge funds.

PAAMCO has a global staff of 127 including 40 investment professionals and is owned by 14 full-time partners. In 2003, PAAMCO established a subsidiary in London ("PAAMCO Europe"), and in 2006, established a subsidiary in Singapore ("PAAMCO Asia"), both of which are majority owned by PAAMCO in the US.

PAAMCO is registered with the SEC and theCFTC; PAAMCO Europe is authorized and regulated by the FSA; and PAA~CO Asia is listed with the Monetary Authority of Singapore. Website: www.paamco.com.

For further information please contact:

Mary Beth Grover I Victor Morales + 1.212.371.5999 The Abernathy MacGregor Group, New York

Henrietta Hirst I Meglena Petkova +44.20.7395.6803 Par Excellence PR Ltd., London

8.4

/':: Pacific Alternative Asset Management Company, LLC SENIOR PROFESSIONALS

Mayer Cherem, MBA, CFA, CQF is a Director and the Sector Specialist responsible for the evaluation and management of opportunistic investments and offensive risk management initiatives. Mayer focuses on identifying new, uncorrelated sources of alpha through and their optimal integration into client portfolios. He is also a member of the firm's Strategy Allocation Committee where he focuses on assessing the impact of asset allocation on overall portfolio risk and performance. As a member of the Risk Management Com.mittee, Mayer is involved in the ongoing development of the firm's risk criteria and quantitative aspects of portfolio construction. Mayer graduated from the Universidad Simon Bolivar with a B.s. in Production Engineering and received an M.B.A. from Columbia Business School.

Maarten Nederlof is a Managing Director and Head of Portfolio Solutions at PAAMCO. He is a member of the Investment Management, Risk Management and Account Management Committees. Prior to joining PAAMCO, Maarten held various positions at Deutsche Bank Securities, Inc. and Deutsche Asset Management, including Managing Director and Global Co-Head of the Hedge Fund Capital Group and Global Head of the Pension Strategies Group. In addition, he was a Managing Director and Portfolio Manager at K2 Advisors, LLC, as well as Director and Head of Investor Risk Management at Capital Market Risk Advisors. Maarten began his career as a quantitative strategist at Salomon Brothers, Inc. He has twenty-four years of experience in investment management and portfolio construction with institutional investors. Maarten is a member of the Investment Committee of The John D. and Catherine T. MacArthur Foundation, as well as the Investor Risk Committee of the International Association of Financial Engineers (IAFE). He is a frequent lecturer and featured speaker at business schools, seminars and industry conferences.

Neale Safaty is a Managing Director and a Sector Specialist for Convertible Bond Hedging in PAAMCO's Portfolio Management Group. Based in the firm's London office, Neale is also responsible for Pan Asia Alpha Strategies' business and client relationships. Before joining PAAMCO, he was Chief Investment Officer at KBC Alpha Asset Management, the Asian-focused fund of funds business of KBC Group. Prior to establishing KBC Alpha Asset Management in 2001, Neale was a Director and Head of Japanese Convertible Sales to UK and European clients at KBC Financial Products (formerly the subsidiary of D.E. Shaw & Co., a leading specialist in convertible securities and equity derivatives products). Before joining D.E. Shaw & Co., he was a Director at BZW responsible for Asian convertible and warrant sales to institutional clients. Neale began his career at Cresvale in 1983 where he initially focused on trading Japanese equity warrants and was London Head of Sales of Convertibles. He has a BSc (Hons) Business Studies degree from City University and holds the Association of International Bond Dealers Diploma (forerunner to ISMA).

8.5 PAAMCO 1 Pacific Alternative Asset Management Company, lLC SENIOR PROFESSIONALS

Kevin Williams, MBA, (FA is the Head of Investment Operations and is responsible for overseeing operational due diligence, legal and regulatory due diligence, fund accounting and administration and PAAMCO's managed account platform. In addition, Kevin has certain institutional account management responsibilities and serves on the board of several PAAMCO funds. He is also a member of the firm's Investment Management and Account Management Committees. In the past, Kevin has served· on the Strategy Allocation Committee and has been a Co-Portfolio Manager of the Commingled Funds as well as the firm's Chief Compliance Officer. He also helped start the London office and led the effort to launch PAAMCO's managed account platforms while conducting research and risk monitoring on hedge funds globally. Prior to joining PAAMCO in 2001, Kevin worked for McGladrey and Pullen, a national public accounting and consulting firm, where he audited several finar:lcial services clients. Kevin graduated from the University of California, Los Angeles with a B.A. in Economics and received his IVI.B.A. with a concentration in Investment Finance from the Marshall School of Business at the University of Southern California. Kevin is a CFA charterholder and a CPA (currently non-practicing/inactive) and has ten years of experience in the financial services sector.

8.6 PAAMCO 2 From: David Sancewich [[email protected]] Sent: Tuesday, July 13,2010 2:37 PM To: Mesa-Mahan, Ana Cc: Vargas, Scott; Neil Rue; Kay Ceserani Subject: RE: PAAMCO Announcement Ana-maria,

'J PCA views this announcement by PAACMO as positive. The promotion of these employees to partners will help maintain valued employees and will help with the long-term growth of PAAMCO as an organization.

Welcome back and let me know if you need anything else.

Cheers.

From: Mesa-Mahan, Ana [mailto:[email protected]] Sent: Tuesday, July 13, 2010 1:58 PM To: David Sancewich Cc: Vargas, Scott Subject: FW: PAAMCO Announcement

Good afternoon David,

Hope all is well. I am preparing a memo regarding PAAMCO's changes to its partnership structure. Could you please provide a brief memo/commentary?

Thanks,

Ana Maria _._-.--_.-----_._--_._------.-_.._._--­ From: Dorothy Walsh [mailto:[email protected]] Sent: Wednesday, June 30, 2010 1:43 PM To: Wolfson, Jeremy Cc: Vargas, Scott; Mesa-Mahan, Ana Subject: PMMCO Announcement

Hi Jeremy,

I wanted to be the first to let you know about an exciting announcement that will be effective and will be made public tomorrow. We've just promoted 4 senior professionals to partners of the firm. They are Kevin Williams, Maarten Neder/of, Neal Safaty and Mayer Cherem. We have produced a press release that will make the press tomorrow which I've attached.

If I don't talk to you before the weekend, enjoy the holiday! By the way, this is still confidential until tomorrow for whatever that's worth. It's practically the end of the day already.

Dorothy

8.7