MWRA Investment Regulations

PERAC Approval Date

Regulation Number

Supplemental Investment Regulation

February 2, 2012  

MWRA EMPLOYEES’ RETIREMENT SYSTEM
SUPPLEMENTARY INVESTMENT REGULATION
Schroder International Alpha Fund (the “Fund”)

With respect to the MWRA Employees’ Retirement Board’s investment in the Schroder International Alpha Fund (the “Fund”), a series of the Schroder Capital Funds (Delaware) (the “Fund Trust”), since the Fund is a US registered management investment company, in which the manager makes investment recommendations and actions on behalf of all investors in the Fund rather than any particular investor, to the extent that the provisions of 840 CMR 17.04(3)(b) and 17.04(10)(a)(1) conflict with the provisions of the Investment Advisory Agreement between the Fund Trust and the Manager (“Agreement”), or the disclosure in the Fund’s prospectus, including any summary prospectus and prospectus supplements (together the “Prospectus”) and Statement of Additional Information and any supplements thereto (together, the “SAI”),  in effect from time to time,  the provisions and/or disclosure in the Agreement, Prospectus or SAI shall apply.

In addition, regarding this investment the following shall apply: 

840 CMR 21.01(3)(a) and (b):  Futures and forward currency contracts may be used for the purposes of managing risks and gaining exposure to certain asset classes or currencies (including short exposures) or as otherwise described in the Fund’s Prospectus or SAI, when deemed to be in the interest of Fund shareholders;

840 CMR 21.01(2):  The Fund may sell a security short when the Fund’s adviser or sub-adviser anticipates that the price of the security will decline, or as otherwise described in the Fund’s Prospectus or SAI, when deemed to be in the interest of Fund shareholders.

840 CMR 21.01(3):  The Fund may invest in options, futures contracts, or other derivative instruments as part of its investment strategy to add incremental return over the Fund’s benchmark index, or as otherwise described in the Fund’s Prospectus or SAI, when deemed to be in the interest of Fund shareholders.  The Fund may purchase or sell futures contracts and options, in order to gain long or short exposure to particular securities or markets, in connection with hedging transactions, or otherwise to increase total return, or as otherwise described in the Fund’s Prospectus or SAI, when deemed to be in the interest of Fund shareholders.
 
840 CMR 21.01(4):  The Fund may use call options written against securities in the portfolio to add incremental return over the Fund’s benchmark index, or as otherwise described in the Fund’s Prospectus or SAI, when deemed to be in the interest of Fund shareholders. 

840 CMR 21.01(5):  The Fund may purchase options other than as required to close out options positions, to add incremental return over the Fund's benchmark index, or as otherwise described in the Fund’s Prospectus or SAI, when deemed to be in the interest of Fund shareholders. 

840 CMR 21.01(6):  The Fund may invest in “restricted securities,” i.e., securities that cannot be sold to the public without registration or the availability of an exemption from registration (such as Rules 144 or 144A), or that are “not readily marketable” because they are subject to restrictions on resale, when deemed to be in the interest of Fund shareholders.

January 3, 2012 19.01(8)

Notwithstanding the provisions of 840 CMR 19.01(8), the MWRA Retirement Board (“the MWRA”) may allocate 9% of the total market value of its portfolio at the time of investment to alternative investments.

March 25, 2011 16.08

In accordance with Investment Guideline 99-3, the Massachusetts Water Resources Authority Retirement Board is authorized to invest in Foundry Venture Capital 2010, L.P.  The Board has been a satisfied investor in Foundry’s predecessor partnership.  The management team and strategy are essentially unchanged.  The Board has submitted the required updated regulatory documents.

February 14, 2011 21.01(7) & (10) The Massachusetts Water Resources Authority Retirement Board is authorized to invest in Landmark Real Estate Partners VI, L.P., a fund of funds.  840 CMR 21.01(7) and 21.01(10) will not apply to investments of the partnership.

December 23, 2009   Notwithstanding the provisions of 840 CMR 16.02(5) or other relevant provisions of the Public Employee Retirement Administration Commission regulations, the Massachusetts Water Resources Authority Employees’ Retirement Board may invest funds of the Massachusetts Water Resources Employees’ Retirement System (the “System”) in the fund known as the INTECH Risk-Managed Broad Large Cap Growth Fund LLC (the “Fund”), and in connection therewith, the System may enter into a Subscription Agreement with the Fund that provides, among other things, that the System agrees to indemnify the Fund and certain other parties and affiliates “against any and all losses, damages, liabilities, costs and expenses (including attorneys’ fees and expenses) incurred or sustained by reason of, or in connection with, any breach of any representation, warranty, covenant or agreement” of the System contained in the Subscription Agreement.

December 9, 2009 21.01 The Massachusetts Water Resources Authority Retirement Board is authorized to invest in INVESCO’s Mortgage Recovery Master Fund. That portion of the fund that invests in mortgage-backed products from the US Treasury’s PPIP program will employ leverage up to 1x. That portion of the fund that invests in whole loans may employ leverage up to 4-6x.

October 21, 2008   The provisions of 840 CMR 21.01(2)(3)(4) and (5) shall not apply to the investment of the Massachusetts Water Resources Authority Retirement Board in the fund known as the WTC-CIF Opportunistic Investment Portfolio.

October 21, 2008   The provisions of 840 CMR 21.01(2)(3)(4) and (5) shall not apply to the investment of the Massachusetts Water Resources Authority Retirement Board in the fund known as the PIMCO All Asset Fund.

April 22, 2008

16.08 In accordance with Investment Guideline 99-3, the Massachusetts Water Resources Authority Retirement Board is authorized to invest in Ascent Venture Partners V.  The Board has been a satisfied investor in Ascent Venture Partners’ previous partnership.  The management group and strategy are essentially unchanged.  The manager has submitted a revised Exemption Application.

August 15, 2003

 

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 Massachusetts Water Resources Authority Retirement Board 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 Massachusetts Water Resources Authority 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 Massachusetts Water Resources Authority Retirement Board 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.”

PERAC 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 Massachusetts Water Resources Authority 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 Massachusetts Water Resources Authority Retirement Board.

February 7, 2000

16.08

The Massachusetts Water Resources Authority Retirement Board may invest in the Loomis Sayles Investment Trust Small Company Growth Fund.  This fund has the same investment strategy and management team as a previously-approved separate account.  The purpose of the change is to reduce administrative and custodial expenses.