INVESTMENT
UNIT FREQUENTLY ASKED QUESTIONS |
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| Are
Disclosure Statement Acknowledgement and Annual Brokerage
Statements still required? |
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No. Under the new regulations,
what is required is the submission of a competitive
process letter, Disclosure Statement, Vendor Certification,
and (if necessary) Application for Exemption upon the
hiring of new vendors of investment-related services. |
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| Does
a pooled fund managed by a retirement board's existing
manager require a new waiver approval? |
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If the pooled
fund encompasses substantially the same investment
objective and basic characteristics as the board's
existing mandate with the manager, such a change could
be authorized by a supplementary regulation citing
PERAC Investment Guideline 99-2.
If the
pooled fund encompasses a substantially different
investment objective, a new waiver approval is necessary.
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| What
are the requirements of a pooled fund investment each
year? |
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All investments
in a pooled fund must comply with G.L. c.32 and PERAC
regulations (840 CMR). The pooled fund manager must
submit a year-end report to PERAC that provides the
following information:
A detailed listing of all the underlying
assets in the portfolio including:
- Cash and short-term investments
- Portfolio turnover rate for the
entire year
- Ratio of portfolio expenses to
assets
- Portfolio rate of return for the
year
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| How
often are pooled fund participant statements needed
and what are the requirements? |
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These statements are needed quarterly and the requirements
are:
- Beginning and ending value of the
board's investment
- Appreciation/depreciation, unrealized
gains and losses, reinvested income, etc.
- Income earned and received by the
board (other than reinvested income)
- Cash or stock distributions
- Purchases/sales of units of the
fund
- Expenses such as management fees
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| How
can a retirement board electronically submit pooled
fund information to PERAC? |
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Please visit the "Pooled Funds" page in the Investment
Unit section of the PERAC website for instructions on
how to electronically submit the pooled fund worksheet.
You may also refer to PERAC Memo #39/2000. |
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| What
types of modifications are allowed under PERAC Investment
Guideline 99-2? |
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Generally, modest modifications to an existing investment
mandate (e.g., "core" to "core plus" fixed income) or
the nature of the investment vehicle (e.g., separate
account to commingled). Substantial changes (such as
equity to fixed income, large cap to small cap, growth
to value, et al) are generally beyond the scope of this
guideline. |
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| Are
investment vehicles utilizing futures and options precluded
from PERAC approval? |
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No. In accordance with Investment Guideline 99-1, limited
use of futures and options for liquidity purposes may
be authorized by supplemental regulation.
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| Does
Investment Guideline 99-3, which allows boards to invest
in new partnerships offered by existing alternative
investments managers without a full competitive process,
also apply to real estate investments?
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No. |
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| Are
there "emergency" provisions in the investment regulations
under which retirement boards may hire investment vendors
without a competitive process? |
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No, but if a board notifies PERAC in writing of special
circumstances that it feels require an exception, PERAC
will consider such a request as expeditiously as possible
and, if appropriate, authorize the board to take temporary
action until a permanent solution can be determined
and implemented. |
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| Is
there a process by which PERAC "pre-approves" investment
managers prior to a retirement board's selection process?
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No, but misleading or outdated questions on RFPs often
create confusion on this point for prospective investment
managers. |
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| How
often should a retirement board submit a Statement of
Investment Objectives to PERAC? |
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According to regulation 18.03, a new statement should
be submitted whenever changes are made and PERAC should
be notified by the end of each calendar year as to whether
any changes in investment objectives had been made in
the past year. A new actuarial valuation is the type
of circumstance that would warrant a new statement of
objectives. |
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| Do
PERAC regulations still contain any restrictions on
retirement boards' asset allocation? |
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No, except for certain limits on real estate (19.01-4)
and alternative investments (19.01-8). Retirement boards
have been encouraged to request rescission of any previous
supplementary regulations that pertained to asset allocation.
Retirement boards should exercise their prudent judgement
and fiduciary duty in determining their asset allocation.
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