PERAC Approval Date: December 11, 2007
Investment/Supplemental Regulation
Regulation Number 17.03: Notwithstanding the provisions of the Public Employee Retirement Administration Commission regulations, the Hampden County Regional 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.
PERAC Approval Date: December 11, 2007
Investment/Supplemental Regulation
Regulation Number 17.03: Notwithstanding the provisions of the Public Employee Retirement Administration Commission regulations, the Hampden County Regional Retirement Board may invest funds of the Retirement System (the “System”) in the fund known as the INVESCO Venture 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, 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.
PERAC Approval Date: May 7, 2007
Investment/Supplemental Regulation
Regulation Number 19.01(6): Notwithstanding the provisions of Public Employee Retirement Administration Commission regulations, the Hampden County Regional Retirement Board may invest funds of the Hampden County Regional Retirement System (the “System”) in the fund known as Fidelity Real Estate Growth Fund III, L.P. (“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 qualifies 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. As such, the limitations of 840 CMR Sections 16.00 et seq. and 17.00 et seq. shall not apply.
- 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.
PERAC Approval Date: March 5, 2007
Investment/Supplemental Regulation
Regulation Number 21.01(2): The State Street Global Advisors Index Plus Edge Strategy is allowed to sell short equities held within the S&P 500 Index. This is to allow the manager to underweight any stock in the index by 0.50% relative to its weight in the benchmark. For every short position taken, a levered long position will be taken so that overall portfolio beta will be maintained at 1.0. Aggregate net equity exposure will not exceed total portfolio assets.
The Board and its consultant understand that shorting stocks can be risky and they are comfortable with the manager’s ability to control those risks in this product.
PERAC Approval Date: March 2, 2007
Investment/Supplemental Regulation
Regulation Number 16.08: The Hampden County Regional Retirement Board is authorized to invest in the Fidelity Real Estate Growth Fund III, now run under the umbrella of Pyramis Global Advisors Trust Company. The Board has been a satisfied investor in a predecessor Fidelity Real Estate Growth Fund, and the strategy and the portfolio management team are essentially the same. The Board has received over 100% of its original investment back from Fidelity (Pyramis) and is pursuing this investment in order to maintain its allocation to real estate. The manager has submitted the required regulatory documents.
PERAC Approval Date: October 8, 2003
Investment/Supplemental Regulation
Regulation Number 16.08: In accordance with PERAC Investment Guideline 99-2, the Hampden County Regional Retirement Board is authorized to make some minor modifications to its large cap equity mandate with Freedom Capital Management.
First, as part of its portfolio rebalancing, the Board will initiate an investment in Freedom’s “Style-Weighted Concentrated Fund”. Run by the same portfolio management team as the board’s existing accounts, this new fund is a “best ideas” fund that operates in the same investment universe as the large cap growth, large cap value, and equity style products in which the board currently invests.
Second, the Board’s large cap growth and large cap value accounts will be changed from separate accounts to commingled funds. With no change in strategy or in the portfolio management team, the Board expects to achieve administrative efficiencies from these changes.
PERAC Approval Date: July 10, 2001
Investment/Supplemental Regulation
Regulation Number 16.08:
- 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 Hampden County Retirement Board’s request as it applies to 840 CMR 17.04(1)(c) is approved.
- 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 Hampden County Retirement Board’s request as it applies to 840 CMR 17.04(6).
- 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 he number of partnerships available to the retirement boards. Consequently, the Hampden County Retirement Board’s request, as it applies to 840 CMR 19.01(7)(a)(6), is approved.
- 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 Hampden County 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 Hampden County Retirement Board.
The Supplementary Regulations approved herein are applicable only to the Hampden County Retirement System’s investment in the INVESCO Venture Partnership Fund III, L.P. 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.