Brockton Investment Regulations

PERAC Approval Date

Regulation Number

Supplemental Investment Regulation

June 7, 2011 21.01(3)

The Brockton Retirement Board is authorized to invest in Brandywine Global Investment Management’s International Fixed Income Investment Grade Fund.  To the extent that the manager uses forward currency contracts in legitimate hedging strategies associated with its fundamental strategy, the limitations of 21.01(3) shall not apply.  Also, purchasing of currencies in lieu of bonds as part of fundamental investment strategy will not be considered speculative in instances where the manager sees no other means to gain access to the markets of specific countries.

March 9, 2011  

The Brockton Retirement Board is authorized to invest in the Mesirow Financial Real Estate Value Fund, L.P.  840 CMR 21.01(7) and 21.01(10) will not apply to investments of the partnership.

February 23, 2011   The Brockton Retirement Board is authorized to invest in the Siguler Guff Distressed Real Estate Opportunities Fund.  840 CMR 21.01(7) and 21.01(10) will not apply to investments of the partnership.

February 23, 2011   The Brockton Retirement Board is authorized to invest in Landmark Partners Real Estate Fund VI.  840 CMR 21.01(7) and 21.01(10) will not apply to investments of the partnership.

February 8, 2011 16.08 The Brockton Retirement Board is authorized to transition funds out of its existing Delaware Investments DPT International Fixed Income Fund (sub-advised by Mondrian Investment Partners) into the Mondrian International Fixed Income Fund, L.P.  The result of this change, which follows some corporate restructuring moves, is that the Board’s money will be managed by the same portfolio management team, with the same strategy, at a slightly lower fee.

June 10, 2010  

Notwithstanding the provisions of the statute or regulations of the Public Employee Retirement Administration Commission to the contrary, including the provisions of 840 CMR 21.01(2), (3), (4), and (5), the Brockton Retirement Board is hereby granted an exemption from restrictions on investment and may invest a portion of the funds of the Brockton Retirement System in the fund known as the Wellington Diversified Inflation Hedges Fund.

July 16, 2009 16.08 In accordance with Investment Guideline 99-2, the Brockton Retirement Board is authorized to modify its international fixed income mandate with Mondrian Investment Partners by transferring assets from the Delaware Investments DPT International Fixed Income Fund to the Mondrian Global Fixed Income Fund.  As a result of this transfer, the Board will have its funds managed by essentially the same investment team it hired in 1999, with the same strategy, and with a slightly reduced management fee.

April 27, 2009 16.08

In accordance with Investment Guideline 99-3, the Brockton Retirement Board is authorized to invest in Ascent Venture Partners V.  The Board has been a satisfied investor in Ascent Ventures’ three predecessor partnerships and has submitted the required regulatory documents.

December 17, 2007

17.03

Notwithstanding the provisions of the Public Employee Retirement Administration Commission regulations, the Brockton Retirement Board may invest funds of the Retirement System (the “System”) in the fund known as the INVESCO Non-US Partnership Fund III, LP (the “Fund”), and effective as of the date of the initial investment by the System of any of its assets in the Fund, while the assets of the System are so invested, the activities and investments of the Fund, directly or indirectly, shall be deemed to satisfy the prohibited transaction rules set forth in 840 CMR 16.00 et seq. and 840 CMR 17.03 to the extent such activities satisfy the prohibited transaction rules set forth in Section 406 of the U.S. Employee Retirement Income Security Act of 1974, as amended (“ERISA”), taking into account statutory exemptions under ERISA, and Prohibited Transaction Class Exemption 84-14, as amended, and other available class exemptions.

December 8, 2003

16.08

In accordance with PERAC Investment Guideline 99-3, the Brockton Retirement Board may invest in Ascent Venture Partners IV, L.P.  The board has had a satisfactory relationship with Ascent Venture Partners through investment in the firm’s two prior partnerships.  The Board seeks to maintain its targeted level of investment in venture capital as two of its current investments in this asset class are in the process of returning capital.

 August 13, 2002

 

Notwithstanding the provisions of the Public Employee Retirement Administration Commission Regulations, the Brockton Retirement Board may invest funds of the Brockton Contributory Retirement System (the “System”) with the real estate investment fund known as Realty Associates Fund VI Corporation (the “Fund”), and while the assets of the System are so invested,

(i) the assets of the System shall be deemed to include, for purposes of applying the rules set forth in 840 CMR 16.00 et seq. and 17.00 et seq., the System’s interest in the Fund but not any of the underlying assets of the Fund or the operating partnership in which the Fund is invested (the “OP”); provided that, at all times, the Fund and the OP qualify as “venture capital operating companies” or “real estate operating companies” within the meaning of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and the regulations promulgated thereunder, or the assets of the Fund and the OP otherwise would not be treated as plan assets under ERISA; and

(ii) the limitation set forth in 840 CMR 19.01(6) shall be deemed satisfied if no single investment of the OP, valued at cost, exceeds 20% of the capital commitments to the Fund and the OP.

November 15, 2001

 

1.Exemption of the Board and INVESCO from the second sentence of 840 CMR 17.04(1)(c) – This Regulation deals with the use of non-public information by managers and consultants.  PERAC recognizes that, in making the investments contemplated by the INVESCO Funds delineated above, that sentence, which prohibits action until information is publicly disseminated, represents an undue burden on the ability of the Partnerships to operate.  Consequently, the Brockton Retirement Board’s request as it applies to 840 CMR 17.04(1)(c) is approved.

2.Exemption of the Board and INVESCO from 840 CMR 17.04(6), except as otherwise provided for in the Partnership Agreement and/or as disclosed in INVESCO’s Form ADV – This Regulation deals with the Priority of Transactions and an investment manager’s obligation to prioritize board transactions and provide the board with the opportunity to act prior to the manager acting, if applicable.  PERAC recognizes that this Regulation may impede the ability of partnerships such as INVESCO’s to operate.  Upon receipt of a copy of the provisions of the Partnership Agreement and/or disclosures in the INVESCO Form ADV, the Commission will approve the Brockton Retirement Board’s request as it applies to 840 CMR 17.04(6).

3.Exemption of the Board and INVESCO from 840 CMR 19.01(7)(a)(6) with respect to the management fees and the General Partner’s Carried Interest to be received by the manager or the General Partner pursuant to the (a) Subscription Agreement, (b) Agreement as defined in the side letter, and/or (c) Manager’s Investment Advisory Agreement with respect to the Board’s commitments to the Partnerships – PERAC recognizes the fact that the market, at the present time, is such that fee limitations, as outlined in these Regulations, result in limiting the number of partnerships available to the retirement boards.  Consequently, the Brockton Retirement Board’s request, as it applies to 840 CMR 19.01(7)(a)(6), is approved.

4.Exemption of the Board and INVESCO from 840 CMR 21.01(2), 21.01(3)(a), 21.01(4), and 21.01(5) to the extent as otherwise permitted under the applicable agreement – These Regulations prohibit certain transactions as follows: 21.01(2) prohibits the sale of securities not owned by the system at the time of the sale (short sales); 21.01(3)(a) permits the use of forward currency contracts in limited circumstances; 21.01(4) prohibits the use of call options; 21.01(5) prohibits the purchase of options other than as required to close out option positions.  PERAC has received a letter dated August 22, 2000 from INVESCO that clarifies the possible use of options, futures, or other derivatives.  In pertinent part, the letter states as follows:“ Although the above referenced funds do not expect to use options, futures, or other derivatives other than infrequently, if at all, futures and/or options would be used only for nonspeculative true hedging purposes.  In general, we would anticipate their use, if at all, for among other reasons to protect downside risk on public securities of companies distributed to the funds by the underlying portfolio funds we invest in and where a commitment to a fund was made in a non US currency to limit currency risk of the funds.”

ERAC approves the exemption of the Board and INVESCO from 840 CMR 21.01(2), 21.01(3)(a), 21.01(4), and 21.01(5) for the limited purpose of protecting downside risk on public securities of companies distributed to the funds by underlying portfolio funds and to limit currency risk of the funds where a commitment to a fund was made in a non US currency.

Please be advised that this Supplemental Regulation as it exempts the Brockton Retirement Board from PERAC Regulations, only does so in relation to the INVESCO Funds that are the subject of the Supplementary Regulation.  In all other circumstances, these Regulations apply to the Brockton Retirement Board.

The Supplementary Regulations approved herein are applicable only to the Brockton Retirement System’s investment in the INVESCO Non-U.S. Partnership Fund III.  Exemption from the regulations pertaining to prohibited investments is limited to the purpose of protecting downside risk on public securities of companies distributed to the funds by underlying portfolio funds and to limiting currency risk of the funds where a commitment to a fund was made in a non-U.S. currency.

March 15, 2000

16.08

In accordance with PERAC Investment Guideline 99-3, the Brockton Retirement Board may invest in Ascent Venture Partners III, L.P.  The board has had a positive relationship with the vendor in its investment in Ascent Venture Partners II, L.P. and has submitted the required documentation relative to this new investment.