Worcester Investment Regulations

PERAC Approval Date

PERAC Approval Date

Regulation Number

Supplemental Investment Regulation

December 27,2011  

With respect to the Worcester Retirement Board (“the Board”) investment in the Capital International Private Equity Fund VI, LP (“Fund”), the following shall apply:

In accordance with such investment, the Board is granted an exemption from the provisions of 840 CMR 17.03(2)(e) regarding parties in interest, as the Fund has indicated that any such engagement may, but is unlikely, to occur.  Notwithstanding the provisions of this paragraph, the Fund shall be deemed in compliance with this regulation provided that if a transaction with a party in interest comes to the attention of the Fund, the Fund notifies the Board and PERAC.

The Board is granted an exemption from the provisions of 840 CMR 16.02(5) with respect to indemnification obligations, as contemplated in the Subscription and Partnership Agreements.  In the event that the provisions related to indemnification obligations of the Subscription and Partnership Agreements conflict with the provisions of this regulation related to indemnification, the provisions of the Subscription and Partnership Agreements shall control.  The Board

determines hereby that the risk of undertaking the potential liability as set forth in the Subscription and Partnership Agreements does not outweigh the potential benefit of investing in the Fund.

The Board is granted an exemption from 840 CMR 19.01(7)(a)(6) with respect to fees based on committed capital, as the Partnership Agreement contemplates that such fees will, after a certain period, be based on a percentage per annum of capital contributions rather than committed capital.  Notwithstanding the limits established herein fees may be based upon committed capital until the earlier to occur of (i) the last day of the Investment Period, as defined in the Partnership Agreement, and (ii) the date a successor fund (as defined in the Partnership Agreement, an unrelated investment fund having investment objectives and strategies substantially similar to the investment objectives of the Fund) begins to pay management fees.

The following provisions of 840 CMR 21.01 are amended as follows:

(i) 840 CMR 21.01(1) is amended by adding at the end of such provision: Notwithstanding the provisions of this regulation, the Fund may make purchases of securities by partial payment of their cost in connection with levered purchases and deferred payment structures as part of its investment strategy;

(ii) 840 CMR 21.01(2) amended by adding at the end of such provision: Notwithstanding the provisions of this regulation, although the Fund does not intend to engage in short sales as conventionally understood, the Fund is not prohibited from doing so under the Partnership Agreement and cannot be precluded from making investments using a structure that could resemble a short sale, for example, in cases where direct legal ownership of an investment in non-public securities by the Fund may be limited for regulatory or similar reasons;

(iii) 840 CMR 21.01(3),(4) and (5) are amended by adding at the end of each provision: Notwithstanding the provisions of this regulation, the Fund may use derivatives and engage in hedging activities for non – speculative purposes in connection with its investments;

(iv) 840 CMR 21.01(6) is amended by adding at the end of such provision: Notwithstanding the provisions of this regulation, the Fund may make investments in non-public securities;

(v) 840 CMR21.01(7) is amended by adding at the end of such provision: Notwithstanding the provisions of this regulation, although the Fund does not intend to make direct investments in mortgages, the Fund is not prohibited from doing so under the Partnership Agreement and cannot be precluded from making such investments;

(vi) 840 CMR 21.01(8) is amended by adding at the end of such provision: Notwithstanding the provisions of this regulation, the Fund may make collateral loans in connection with levered purchases;

(vii) 840 CMR 21.01(9) is amended by adding at the end of such provision: Notwithstanding the provisions of this regulation, the Fund may make loans to employees of, or individuals affiliated with, its portfolio companies in connection with its investments; and

(viii) 840 CMR 21.01(10) is amended at the end of such provision: Notwithstanding the provisions of this regulation, although the Fund is generally prohibited from making direct purchases or leases of real estate, such investments could be made with the consent of the Fund’s advisory committee and the Fund cannot be precluded from making such investments.

The Fund’s objective is to acquire, hold and dispose of securities, mainly through privately negotiated equity and equity - related investments operating primarily in global emerging markets outside of the U.S., in order to seek long term appreciation.  The Board is satisfied with respect to representations made by the Fund with respect to providing the Board with a carve out provision to avoid investments that would potentially violate provisions of M.G.L. c. 32, s. 23(2)(g)(ii)(iii).

March 14, 2011 16.08

The Worcester Retirement Board is authorized to invest in the State Street Global Advisors Global Natural Resources Non-Lending Index Fund.  Because of the passive nature of this mandate and the very limited number of possible providers of this particular type of index fund, the Board did not conduct a conventional search process.  Instead, the Board’s consultant identified and solicited proposals from possible providers of this index product.  Based on the appropriateness of its product relative to the Board’s needs as well as other factors such as fees and liquidity, the Board voted to select the SSgA Global Natural Resources Non-Lending Index Fund for this mandate.  The Board’s familiarity with SSgA as an existing manager was also considered.

December 1, 2010 16.08 In accordance with Investment Guideline 99-3, the Worcester Retirement Board may invest in Newstone Capital Partners II.  The Board has been a satisfied investor in Newstone Capital Partners I.  The management team and strategy remain the same and the Board has submitted the required regulatory documents.

Notwithstanding the provisions of the Public Employee Retirement Administration Commission’s investment regulations, the Worcester Retirement Board may exercise its discretion to invest funds of the Worcester Retirement System (the “System”) in Newstone Capital Partners II, L.P. (the “Fund”), as contemplated by 840 CMR 19.00 et. seq., and while the funds of the System are invested in Partnership Interests (as defined in the Fund’s Amended and Restated Limited Partnership Agreement) of the Fund, for purposes of applying the rules set forth in 840 CMR 16.00 et. seq., 17.00 et. seq., and 19.00 et. seq., investments of the System shall not be deemed to include any of the underlying assets of the Fund, but shall only include the Partnership Interests of the Fund, and the Fund shall not be deemed to be an investment manager or fiduciary to the System; provided that the Fund’s general partner shall use its reasonable best efforts at all times to conduct the affairs of the Fund such that the assets of the Fund would not constitute plan assets of any ERISA partner subject to Title I of ERISA Section 4975 of the Internal Revenue Code of 1986, as amended, pursuant to the United States Department of Labor at Section 2510.3-101 of Part 2510 of Chapter XXV, Title 29 of the Code of Federal Regulations.

June 25, 2010  

Notwithstanding the provisions of any statute or regulations of the Public Employee Retirement Administration Commission to the contrary, including the provisions of 840 CMR 21.01(1)(4)(5) and (6), the Worcester Retirement Board is hereby granted an exemption from restrictions on investment and may invest a portion of the funds of the Worcester Retirement System in the fund known as White Deer Energy, L.P.(the “Fund”).  The Fund is a private equity fund which will invest in middle-market energy companies.  The Fund will target $50 to $100 million equity investments in companies active in oil and gas production, oil service and equipment manufacturing and in energy infrastructure, primarily in North America.

October 11, 2009 16.08 The Worcester Retirement Board is authorized to invest in State Street Global Advisors’ Russell 1000 Growth Non-Lending Index Fund.  The Board did not conduct a traditional competitive search process in selecting this manager, but the Board’s investment consultant did solicit proposals from several major providers of Russell 1000 Growth index funds and the Board made its selection based on objective consideration of the criteria contained in the responses.  The benefits accruing to the Board from SSgA being an existing manager were also considered.

August 13, 2009 16.08 In accordance with Investment Guideline 99-2, the Worcester Retirement Board is authorized to modify its international equity index mandate with State Street Global Advisors.  As it transitions out of securities lending funds and seeks to maximize portfolio liquidity, the Board will be adding an investment in SSgA’s Daily MSCI-EAFE Index Fund to its existing SSgA MSCI-EAFE Index funds which provide less liquidity.

June 4, 2009

16.08 In accordance with Investment Guideline 99-22, the Worcester Retirement Board is authorized to transfer assets from four State Street Global Advisors index funds that incorporate securities lending to four corresponding index funds that do not allow securities lending.  These modifications will ensure that the Board has daily liquidity on the funds in question.  The funds involved are the S&P 500 Index, Russell 1000 Value Index, S&P 400 Mid Cap Index, and MSCI-EAFE Index.

March 3, 2009  

(1) Notwithstanding the provisions of the Public Employee Retirement Administration Commission regulations, the Worcester Retirement Board may invest funds of the Worcester Retirement System (“System”) in the fund known as Aslan Realty Partners IV, LLC (the “Fund”), and while the assets of the System are so invested, 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., 17.00 et seq., and 840 CMR 21.01, the System’s interest in the Fund but not any of the underlying assets of the Fund; provided that, at all times, either (1) less than twenty-five percent (25%) of each class of equity interest in the Fund is held by “benefit plan investors” (within the meaning of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and the regulations promulgated thereunder), or (2) the Fund qualifies as a “venture capital operating company” or “real estate operating company” within the meaning of ERISA and the regulations promulgated thereunder.

(2) The limitations and restrictions of 840 CMR Section 19.01(6) shall not apply to the Fund for the two-year period commencing on the date of the Fund’s initial investment.

February 9, 2009

19.01(6)

Notwithstanding the provisions of the Public Employee Retirement Administration Commission regulations, the Worcester Retirement Board may invest funds of the Worcester Retirement System (the “System”) in the fund known as AEW Partners VI, L.P. (the “Fund”), and while the assets of the System are so invested, 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., 17.00 et seq.; and 840 CMR 21.01, the System’s interest in the Fund but not any of the underlying assets of the Fund; provided that, at all times, either (1) less than twenty-five percent (25%) of each class of equity interest in the Fund is held by “benefit plan investors” (within the meaning of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and the regulations promulgated thereunder), or (2) the Fund qualifies as a “venture capital operating company” or “real estate operating company” within the meaning of ERISA and the regulations promulgated thereunder.e

The Limitations and restrictions of 840 CMR Section 19.01(6) shall not apply to the Fund for the two-year period commencing on the date of the Fund’s initial investment.

October 28, 2008 16.08 In accordance with Investment Guideline 99-3, the Worcester Retirement Board may invest in the Riverside Capital Appreciation Fund V.  The Board has been a satisfied investor in predecessor funds with Riverside Capital.  Performance has been good and the strategy and investment team are essentially unchanged.  The manager has submitted an updated exemption application.

March 24, 2008 16.08 In accordance with Investment Guideline 99-3, the Worcester Retirement Board is authorized to invest in Ascent Venture Partners V.  The Board has been a satisfied investor in Ascent Venture Partners IV.  The management team and strategy are unchanged and Ascent Venture Partners has submitted an updated Exemption Application.

February 25, 2008   Notwithstanding the provisions of any 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 Worcester Retirement Board is hereby granted an exemption from restrictions on investment and may invest eight million dollars ($8,000,000) of the funds of the Worcester Retirement System (the “System”) in the fund known as the Global Infrastructure Partners Fund I, a Guernsey limited partnership (“Fund”).  The Fund will primarily seek to make control-oriented equity, equity-related and investments in debt securities in infrastructure and infrastructure-related assets including in businesses that own, operate, develop, manage or support infrastructure-related assets in energy, transportation and water sectors.

January 18, 2008

16.08

 

In accordance with Investment Guideline 99-3, the Worcester Retirement Board may invest in Northstar Mezzanine Partners V.  The Board has been a satisfied investor in Northstar’s two preceding funds.  The management team and investment strategy are unchanged.  The manager has submitted an updated Exemption Application.

June 27, 2007

21.01(2)(3)(4)(5)

Notwithstanding the provisions of any 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 Worcester Retirement Board is hereby granted an exemption from restrictions on investment and may invest a portion of the funds of the Worcester Retirement System (the “System”) in the fund known as the EB Daily Valued Global Alpha I Fund of Mellon Capital Management Corporation.

June 27, 2007

 

Notwithstanding the provisions of the Public Employee Retirement Administration Commission regulations, the Worcester Retirement Board may invest funds of the Retirement System (the “System”) in the fund known as the RREEF Global Real Estate Securities Fund (US$ Hedged Strategy) 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 the statutory exemptions available under ERISA, and Prohibited Transaction Class Exemption 84-14, as amended, Prohibited Transaction Class Exemption 2003-24, and other available class exemptions.

May 22, 2007

 

Notwithstanding the provisions of the Public Employee Retirement Administration Commission’s investment regulations, the Worcester Retirement Board may exercise its discretion to invest funds of the Worcester Retirement System (the “System”) in Newstone Capital Partners, L.P. (the “Fund”), as contemplated by 840 CMR 19.00 et seq., and while the funds of the System are invested in Partnership Interests (as defined in the Fund’s Amended and Restated Limited Partnership Agreement) of the Fund, for purposes of applying the rules set forth in 840 CMR 16.00 et seq., 17.00 et seq. and 19.00 et seq., investments of the System shall not be deemed to include any of the underlying assets of the Fund, but shall only include the Partnership Interests of the Fund, and the Fund shall not be deemed to be an investment manager or fiduciary to the System; provided that the Fund’s general partner shall use its reasonable best efforts at all times to conduct the affairs of the Fund such that the assets of the Fund would not constitute plan assets of any ERISA partner subject to Title I of ERISA Section 4975 of the Internal Revenue Code of 1986, as amended, pursuant to the United States Department of Labor at Section 2510.3-101 of Part 2510 of Chapter XXV, Title 29 of the Code of Federal Regulations.

March 13, 2007

17.03

Notwithstanding the provisions of the Public Employee Retirement Administration Commission’s investment regulations, the Worcester Retirement Board may exercise its discretion to invest funds of the Worcester Retirement System (the “System”) in Harvest Partners V, L.P. (the “Fund”), as contemplated by 840 CMR 19.01(6), and while the funds of the System are invested in shares of the Fund, for purposes of applying the rules set forth in 840 CMR 16.00 et seq. and 17.00 et seq., investments of the System shall not be deemed to include any of the underlying assets of the Fund, but shall only include the shares of the Fund, and the Fund shall not be deemed to be an investment manager or fiduciary to the System; provided that the General Partner shall use its reasonable best efforts at all times to conduct the affairs of the Partnership such that the assets of the Partnership would not constitute plan assets of any ERISA partner subject to Title I of ERISA or Section 4975 of the Internal Revenue Code of 1986, as amended, pursuant to the United States Department of Labor at Section 2510.3-101 of Part 2510 of Chapter XXV, Title 29 of the Code of Federal Regulations.

February 21, 2007

16.08

In accordance with Investment Guideline 99-3, the Worcester Retirement Board is authorized to invest in Boston Millennia Partners III.  The Board has been a satisfied investor in BMP’s predecessor partnership as well as in a previous venture partnership managed by this team while at a different firm.  The management team remains intact and, after conducting due diligence on the firm, the board and its consultant are confident in BMP’s capabilities.

February 15, 2007

17.03

Notwithstanding the provisions of the Public Employee Retirement Administration Commission regulations, the Worcester Retirement Board may invest funds of the Retirement System (the “System”) in the fund known as the INVESCO Non-US Partnership Fund II, 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.

February 15, 2007

17.03 

Notwithstanding the provisions of the Public Employee Retirement Administration Commission regulations, the Worcester Retirement Board may invest funds of the Retirement System (the “System”) in the fund known as the INVESCO US Buyouts Partnership Fund II, 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, and the underlying funds in which the Fund may invest, 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.

February 14, 2007

17.03

Notwithstanding the provisions of the Public Employee Retirement Administration Commission regulations, the Worcester Retirement Board may invest funds of the Retirement System (the “System”) in the fund known as the INVESCO U.S. Venture Partnership Fund II, 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, and the underlying funds in which the Fund may invest, 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.

February 13, 2007

 

Notwithstanding the provisions of the Public Employee Retirement Administration Commission regulations, the Worcester Retirement Board may invest funds of the Retirement System (the “System”) in the fund known as INVESCO Core Real Estate USA, LLC (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 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; provided that, at all times, the Fund qualified as a “venture capital operating company” within the meaning of the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.

December 4, 2006

16.08 

In accordance with Investment Guideline 99-3, the Worcester Retirement Board is authorized to invest in the Riverside Capital Europe Fund III.  The Board has been a satisfied investor in two of Riverside’s preceding domestic buyout funds, both of which have produced impressive returns to date.  The new fund focuses on European rather than domestic investments but the Board and its consultant have decided that this investment is appropriate because of:

  1. the strong results from the two domestic buyout funds that the Board has invested in
  2. the impressive performance of Riverside’s precious European buyout fund,
  3. the basic investment process and strategy is the same, and
  4. most importantly, the same management team that has overseen the domestic operations also oversees the European operations.

December 4, 2006

16.08 

In accordance with Investment Guideline 99-3, the Worcester Retirement Board is authorized to invest in the Standard Life European Strategic Partners Fund 2006.  The Board has been a satisfied investor in Standard Life’s first ESP Fund (2000) and the basic strategy as well as the management team are essentially the same.  The manager has submitted the required updated regulatory documents.

August 30, 2006

16.08 

In accordance with PERAC Investment Guideline 99-2, the Worcester Retirement Board is authorized to invest in State Street Global Advisors’ S&P 400 Index fund on a temporary basis.

This mandate is to allow the Board to maintain its allocation to mid cap equity following the termination of The Boston Company.  TBC had assigned a new portfolio manager to Worcester’s account about a year ago.  The Board concluded at its August 22, 2006 meeting that it no longer had confidence in him as a result of badly lagging performance and significantly greater volatility than anticipated.

The Board currently has three index fund accounts with SSgA and has been very satisfied with its relationship with the firm.

This temporary mandate will expire on December 29, 2006.

June 26, 2006

16.08 

 In accordance with Investment Guideline 99-2, the Worcester Retirement Board is authorized to transfer its assets from TBC’s International ACWI (All Countries World Index) Fund to TBC’s EAFE Value Fund.  The two funds are managed by the same portfolio management team and in a similar style, with the difference being that the ACWI Fund includes a small allocation to emerging market equities.  Since the Board recently hired a separate manager dedicated to emerging market equities, the Board is making this change in order to avoid any overlap between the two managers.  By slightly limiting its investment universe, the Boston Company will focus on international developed market equities while the newly hired manager will be responsible for emerging market equities.

May 15, 2006

16.05

Notwithstanding the provisions of 840 CMR 16.00 et seq., the Worcester Retirement Board may be permitted to invest funds of the Worcester Retirement System in the funds known as Aetos Capital Multi-Strategy Arbitrage Cayman Fund, Aetos Capital Distressed Investment Strategies Cayman Fund, Aetos Capital Long/Short Strategies Cayman Fund and/or Aetos Capital Market Neutral Strategies Cayman Fund (collectively “Aetos Funds”) noting that as a so-called hedge fund of funds, the Aetos Funds do not trade securities, and therefore do not pay brokerage commissions or use soft dollars; and, the Aetos Funds do not vote proxies or participate in tender offers, because said Funds do not own individual securities.

May 15, 2006

16.00, 17.00, 18.00, 19.00 and 21.00

Notwithstanding the provisions of 840 CMR 16.00 et seq., the Worcester Retirement Board may be permitted to invest funds of the Worcester Retirement System in BPIF Non-Taxable L.P., a Delaware limited partnership (the “Fund”), noting that as a so-called hedge fund of funds, the Fund invests in other funds, and while Blackstone Alternative Asset Management L.P., the Fund’s general partner (“General Partner”) can comply with the provisions of 840 CMR 16.00 et seq. with respect to the Fund’s direct investments, it cannot make such representations regarding any indirect investments, or the investments of the funds which it does not directly manage.

December 12, 2005

16.08

In accordance with Investment Guideline 99-3, the Worcester Retirement Board is authorized to invest in Northstar Mezzanine Partners IV.  The system has been a satisfied investor in Northstar Mezzanine Partners III, the immediate predecessor fund, and has submitted updated Disclosure Statement and Exemption Application forms.

October 19, 2005

19.01(8)

The Worcester Retirement Board is authorized to increase the Board’s maximum allocation to alternative investments (venture capital, private equity, et. al.) from the current regulatory maximum of 5% of total portfolio assets at the time of investment to 10%.  The Board’s current allocation is about 4% and it is unlikely that the allocation will rise as high as 10%.  Nevertheless, because of the special challenges involved in investing in this asset class, the Board would like the flexibility to exceed the existing 5% limit.  The Board has had experience investing in alternative investments since 1992.

June 24, 2005

16.08

 In accordance with PERAC Investment Guideline 99-2, the Worcester Retirement Board is authorized to modify its large cap equity mandate with State Street Global Advisors by transferring assets from the S&P 500 Index Fund to the Russell 1000 Value and Russell 1000 Growth index funds.  Together, the two Russell 1000 funds cover the same large cap universe as the S&P 500, but the separation into the two style-specific funds will offer the board greater flexibility to control risk, and to take advantage of opportunities, relative to its growth/value allocation.

May 6, 2005

19.01(6)

Notwithstanding the provisions of Public Employee Retirement Administration Commission regulations, including 840 CMR 21.01(6), the City of Worcester Retirement Board may exercise its investment discretion to invest funds of the City of Worcester Retirement System (the “System”) in the shares of a real estate investment trust known as Hancock Timberland VII Inc. (the “Fund”), as contemplated by 840 CMR 19.01(6), and while funds of the System are invested in shares of the Fund, for purposes of applying the rules set forth in 840 CMR 16.00 et seq. and 17.00 et seq., investments of the System shall not be deemed to include any of the underlying assets of the Fund, but shall only include the shares of the Fund, and the Fund shall not be deemed to be an investment manager or fiduciary to the System; provided that at all times the Fund qualifies as a “real estate operating company” within the meaning of the Employee Retirement Security Act of 1974, as amended (“ERISA”) and the regulations promulgated there under, or the assets of the Fund are otherwise not treated as “plan assets” of the System.

May 2, 2005

16.08

In accordance with PERAC Investment Guideline 99-3, the Worcester Retirement Board is authorized to invest in Charlesbank Equity Fund VI.  The Board has been a satisfied investor in the predecessor fund, Charlesbank Equity Fund V.

January 31, 2005

16.08

In accordance with Investment Guideline 99-2, the Worcester Retirement Board is authorized to make a modest modification to its large cap equity index mandate with State Street Global
Advisors.  Standard & Poor’s has announced that it will be adopting a free-float methodology for all their U.S. equity indexes, with final implementation scheduled for September 2005.  In order to help address concerns over the possible market impact of this rebalancing, S&P has created provisional indexes.  In hopes of avoiding whatever market impacts might be caused by the full transformation later this year, the Worcester Retirement Board has decided to switch from SSGA’s S&P 500 Index Fund to the SSGA S&P 500 Flagship Securities Lending Provisional Fund.

February 25, 2004

19.01(6)

Notwithstanding the provisions of Public Employee Retirement Administration Commission regulations, the City of Worcester Retirement Board may invest funds of the City of Worcester Retirement System (the “System”) with a real estate investment fund, as contemplated by 840 CMR 19.01(4)-(6), known as Heitman Value Partners, L.P. (“the Fund”), and while the funds of the System are so invested 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; provided that, at all times, the Fund qualifies as a “real estate operating company” or venture capital operating company” 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 otherwise would not be treated as subject to ERISA.

October 27, 2003

16.08

In accordance with PERAC Investment Guideline 99-3, the Worcester Retirement Board may invest in the Ascent Venture Partners IV Fund.  The board has been an investor in Ascent’s two predecessor funds and the investment results from those two partnerships have been satisfactory to date.

October 20, 2003

16.08

In accordance with PERAC Investment Guideline 99-3, the Worcester Retirement Board is authorized to invest in the Riverside Capital Appreciation Fund 2003.  This is the immediate successor fund to the Riverside Capital Appreciation Fund 2000, in which the Board invested in 2001.  The earlier fund has had strong performance to date and the new fund is to be managed by the same investment team and with the same investment objectives.

September 22, 2003

16.08

Under the terms of Investment Guideline 99-2, the Worcester Retirement System is authorized to make a minor modification to its investment-grade fixed income mandate with Opus Investment Management.  Under this change, Opus will create a separate account for Treasury Inflation-Protected Securities (TIPS), a segment of the market included in the universe the firm currently manages.  Since the United States has issued only ten offerings of TIPS bonds and the account will not require active management, Opus will manage this account for a fee of only 0.10% which is lower than the fee for the system’s existing core bond account.

September 22, 2003

16.08

The Worcester Retirement Board is authorized to make a modest modification to its high-yield investment mandate with Loomis Sayles.  This modification involves no change in the overall investment objective or in the account’s benchmark.

Under this modification, Loomis Sayles is authorized to invest in senior loans (“bank loans”) up to 20% of the market value of the account.  These are loans that are made by banks to the same universe of companies that comprises the high yield market.  Because these loans are typically senior in the capital structure as well as secured by collateral, they typically have better default recovery rates and superior risk-adjusted performance than conventional high-yield bonds.  Also, since these loans are adjustable-rate in nature, they have very little volatility from interest-rate changes.

Thus, it is expected that the inclusion of senior loans will help to preserve principal and reduce volatility in the high-yield portfolio.

June 13, 2001

16.08

In accordance with PERAC Investment Guideline 99-2, the Worcester Retirement Board may modify its international equity mandate with The Boston Company.  The Board currently invests in TBC’s International Equity Pooled Fund and TBC makes small tactical allocations to emerging markets through its Emerging Markets Pooled Fund.  TBC has created a single commingled fund, the Pooled Employees International ACWI (ex U.S.) Equity Fund by which to accomplish the same investment strategy in a more efficient manner.  The Board will incur no cost or change in fees by making this modification.

August 14, 2001

16.08

In accordance with Investment Guideline 99-2, the Worcester Retirement Board is authorized to modify its fixed income management mandate with Loomis Sayles.  The existing mandate calls for Loomis to invest in “high yield” corporate bonds and lower-investment-grade corporate bonds in approximately equal amounts.  In order to simplify the board’s portfolio structure, the lower-investment-grade portion of the account will be eliminated and Loomis will concentrate on high- yield bonds.  The board has had a satisfactory relationship with Loomis Sayles for over five years and the firm is recognized within the industry as a leading manager of high-yield bonds.

October 19, 2000

16.08

The Worcester Retirement System may invest in the Standard Life European Strategic Partners Fund.  This is an alternative investments “fund-of-funds” in which, according to an agreement between the Board and Standard Life, decisions as to the actual selection of investment partnerships will be made by Standard Life in a process not overseen by the Board.  The Board will periodically monitor the selection process used by Standard Life.

April 6, 2000

16.08

In accordance with PERAC Investment Guideline 99-2, the Worcester Retirement Board may re-allocate 50% of the assets currently invested in the SSGA S&P 500 Flagship Fund into the SSGA Equal Weighted S&P 500 Fund.  Under this modification, the Board will be invested in the same universe of stocks but will reduce its exposure to large capitalization growth stocks and increase its exposure to the smaller stocks within the S&P 500 Index.  The board believes this modification will decrease its exposure to stocks that may be over-valued and increase its exposure to stocks that may represent better value.

March 20, 2000

16.08

In accordance with PERAC Investment Guideline 99-3, the Worcester Retirement System may invest in Boston Millennia Partners II, L.P.  The System has not been invested in Boston Millennia Partners (BMP) I but information provided by the System, by the System’s Investment Consultant, and by the manager indicates that BMP II can be reasonably considered a successor fund to one of the System’s existing funds, Boston Capital Ventures (BCV) III.  The general partners and other key managers of BMP are essentially the same team that managed BCV III.  These men, led by Managing General Partner Dana Callow, Jr., created BMP in 1997, working initially in the same office space, and still maintain management responsibility for the investments in BVC III.  Also, the investment objective of BMP II is the same as for BCV III.