Brookline Retirement Board Investment Regulations

Regulations accepted by the board and approved by PERAC

PERAC Approval Date: November 2, 2010

Investment/Supplemental Regulation

Regulation Number 21.01(2)-(5): About 85% of the portfolio activity of the Wellington Management Company Commodities approach will consist of futures contracts. Almost all of the futures contracts used will be exchange-traded on U.S. exchanges. A small portion of the portfolio could consist of over-the-counter swaps, puts and/or calls, ETFs, or contracts based in foreign exchanges. The manager will have net long-only positions on all commodities used in the fund, although short positions on specific contracts may be taken when valuation inefficiencies are observed.

PERAC Approval Date: September 8, 2008

Investment/Supplemental Regulation

Regulation Number 16.08: In accordance with Investment Guideline 99-3, the Brookline Retirement Board is authorized to invest in INVESCO Venture Partnership Fund V, L.P.  The Board has been a satisfied investor in a predecessor fund.  
Performance has been good and the portfolio management team is essentially unchanged.  The manager has submitted an updated Exemption Application.

PERAC Approval Date: September 24, 2007

Investment/Supplemental Regulation

Regulation Number 16.08: The Brookline Retirement Board is authorized to invest in State Street Global Advisors’ MSCI-EAFE Fund on a temporary basis.  After several months of having the firm on “watch” due to long-term underperformance, the Board voted to terminate its previous international equity manager, The Boston Company, on September 18, 2007.  The SSgA fund was selected for this mandate because the Board has two existing index fund relationships with the firm and SSgA offered the lowest cost, most efficient option.

PERAC Approval Date: September 24, 2007

Investment/Supplemental Regulation

Regulation Number 16.08: The Brookline Retirement Board is authorized to invest in State Street Global Advisors’ Lehman Aggregate Index Fund.  At its September 18, 2007 meeting, the Board terminated its investment grade bond mandate with BlackRock for long-term underperformance.  The SSgA fund was selected for this mandate because the Board has two existing index fund relationships with the firm and SSgA offered the lowest cost, most efficient option.

PERAC Approval Date: May 7, 2007

Investment/Supplemental Regulation

Regulation Number 16.08: In accordance with Investment Guideline 99-3, the Brookline Retirement Board is authorized to invest in HarbourVest Partners VIII.  The Board has been a satisfied investor in HarbourVest’s predecessor fund, which has had a strong return to date.  The management team remains essentially intact, the strategy is unchanged, and the Board has submitted the required updated regulatory documents.

PERAC Approval Date: April 6, 2001

Investment/Supplemental Regulation

Regulation Number 21.01: The Brookline Retirement Board has authorized State Street Research & Management Company to utilize financial futures and options in the management of its fixed income portfolio.  These instruments will be used solely as tools to manage portfolio risk with regard to such measures as duration, convexity, and yield curve analysis.  Use of these instruments is limited to 25% of the total value of the fixed income portfolio.  (All other Prohibited Investments of 21.01 still apply).

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 Brookline 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 Brookline 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 Brookline Retirement Board request, as it applies to 840 CMR 19.01(7)(a)(6), is approved.

PERAC Approval Date: June 28, 1999

Investment/Supplemental Regulation

Regulation Number 21.01: The Brookline Retirement Board has authorized State Street Research & Management Company to utilize financial futures and options in the management of its fixed income portfolio. These instruments will be used solely as tools to manage portfolio risk with regard to such measures as duration, convexity, and yield curve analysis.  Use of these instruments is limited to 25% of the total value of the fixed income portfolio. (All other Prohibited Investments of 21.01 still apply).

PERAC Approval Date: March 7, 1996

Investment/Supplemental Regulation

Regulation Number 20.03(1): Equity investments shall not exceed 60% of the total book value of the portfolio at the time of purchase.

PERAC Approval Date: November 11, 1995

Investment/Supplemental Regulation

Regulation Number 20.06(8): Purchases and sales of fixed income investments with maturities exceeding one year shall not exceed 200% of the market value of all fixed income obligations in any twelve month period, excluding cash and short term obligations.

Regulation Number 20.07(6): Purchases and sales of equity investments shall not exceed 100% of the average market value of all equity holdings in any twelve month period.

PERAC Approval Date: February 21, 1992

Investment/Supplemental Regulation

Regulation Number 4.03: Copies to be Sent to PERA Within four (4) weeks of the close of each month, after all entries for the month have been posted and a trial balance performed, the board shall send to the Public Employee Retirement Administration a photocopy of the following for the month:

1. cash book entries;
2. trial balance; and
3. journal entries.

PERAC Approval Date: February 20, 1991

Investment/Supplemental Regulation

Regulation Number 16.02(4): The board may charge custodian bank expenses against earned income from investments in an amount not to exceed $29,763.96.

PERAC Approval Date: December 11, 1991

Investment/Supplemental Regulation

Regulation Number 16.02(3): The board may incur expenses for investment advice or management of the funds of the system by a qualified investment manager and the board may incur expenses for consulting services. Such expenses may be charged against earned income from investments provided that the total of such expenses shall not exceed in any one year:

1. 1% of the value of the fund for the first $5 million; and
2. 0.5% of the value of the fund in excess of $5 million.

Regulation Number 16.02(4): The board may employ a custodian bank and may charge such expenses against earned income from investments provided that such expenses shall not exceed in any one year .08% of the value of the fund.

PERAC Approval Date: September 12, 1990

Investment/Supplemental Regulation

Regulation Number 20.03(1): Equity investments shall not exceed 50% of the total book value of the portfolio at the time of purchase.

PERAC Approval Date: August 24, 1989

Investment/Supplemental Regulation

Regulation Number 20.03(4): International equity and fixed income investments shall not exceed 15% of the total portfolio valued at market.

Regulation Number 20.04(6): Foreign corporations and obligations issued and guaranteed by foreign governments.

Regulation Number 20.07(5): Equity investments shall be made only in securities listed on a United States stock exchange, traded over the counter in the United States or traded in foreign stock markets.

PERAC Approval Date: February 9, 1989

Investment/Supplemental Regulation

Regulation Number 4.03(1): Within four (4) weeks of the close of each month, after all entries for the month have been posted and a trial balance performed, the board shall send to the Public Employee Retirement Administration a photocopy of the following for the month:

1. monthly checking account activity
2. trial balance
3. journal entries

Regulation Number 4.03(2): The board shall instruct its custodian bank to send to the Public Employee Retirement Administration a tape of daily cash settlement activity and purchase and sale transaction information within four (4) weeks of the close of each month.