Virginia Investment Pool Webinar: Introducing the VIP Stable Value Liquidity Pool & MYACCESS

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1 Virginia Investment Pool Webinar: Introducing the VIP Stable Value Liquidity Pool & MYACCESS December 9, 2016

2 VIP Liquidity Pool Objectives and Benefits VIP liquidity pool provides a liquid investment pool alternative for Virginia localities whose prime fund options are disappearing due to money market reform VIP liquidity pool serves as a sweep fund for the VIP 1-3 Year portfolio facilitating a more efficient transaction experience VIP liquidity pool is designed to operate efficiently and at a low cost structure VIP liquidity pool offers participants diversification for their short term cash Professional, active management Rating Agency and Program Administrator oversight Governed by a Board of Trustees, which is comprised of local government Treasurers and Chief Investment Officers Public Trust Advisors

3 Money Market Reform and Bank Regulation Impact on Local Governments Money Market reform is forcing many funds to convert from Prime to Government resulting in lower yields In response many funds have closed or consolidated Many local governments are looking to LGIPs to replace their existing Prime funds Bank regulation and Basel 3 are impacting the bank deposit industry Money Market Funds and Bank Deposits have been popular investments for Virginia localities VIP liquidity pool could replace the demand for Money Market Funds/Bank Deposits and give Virginia localities an additional diversification tool for their cash and bond proceeds 3

4 Money Market Reform Impact on LGIPs Local government investment pools (LGIP s) get accounting and reporting guidance from GASB not the SEC Historically LGIP s were managed as 2a-7 like In response to MMF reform, GASB published new guidelines for LGIPs. Statement 79 was issued to provide clarification to external investment pools Statement 79 replaces the reference in existing GASB literature to Rule 2a-7 with criteria that are similar in many respects to those in Rule 2a-7. Maturity Credit quality Diversification Liquidity Shadow Pricing LGIPs will still be able to maintain a stable $1.00 NAV without becoming a government securities-only fund Public Trust Advisors

5 Investment Management, Transfer Agent, Fund Accountant: Public Trust Advisors Public Trust team is a leader in all aspects of managing local government investment pools. Public Trust has demonstrated its abilities to improve investment performance, build client relations and introduce new LGIP participant services. The Public Trust team completed successful 60-day transitions of COLOTRUST, NYCLASS, Texas CLASS, Michigan CLASS, TrustINdiana and LAMP onto its LGIP Administration System. Public Trust maintains a dedicated fund-accounting and client service team whose primary objectives and responsibilities focus on the satisfaction of our LGIP participants. 5

Public Trust Advisors Liquidity Pool Experience Public Trust Advisors LLC (Public Trust) is a SEC registered independent

flows, risk tolerances and investment guidelines.

6 Public Trust Advisors Liquidity Pool Experience Public Trust Advisors LLC (Public Trust) is a SEC registered independent investment advisor headquartered in Denver, Colorado with offices in New York, Florida, Texas, California, Ohio, New Mexico, and Michigan. Public Trust is a national leader in providing customized investment advisory solutions based on each clients own unique cash flows, risk tolerances and investment guidelines. Public Trust services 8 LGIP s nationwide with more than 3,600 LGIP participant accounts. Combined assets under management including administration/advisement total over $14.7 billion* Public Trust also manages an additional $5+ billion* in customized separately managed portfolios *As of November 30, 2016 Public Trust Advisors

7 Public Trust: LGIPs That We Serve LGIP Services Assets Rating Investment Style Administration & Investment Advisor $4.7 billion S&P AAAm Prime and Government Administration & Investment Advisor $1.3 billion S&P AAAm Prime Administration Only $1.2 billion S&P AAAm Prime Administration & Investment Advisor $813 million S&P AAAm Prime Administration & Investment Advisor $560 million S&P AAAm Government Administration & Investment Advisor $4.9 billion S&P AAAm Prime and Government Administration & Investment Advisor $685 million NR Prime As of November 30, Standard & Poor s Ratings in no way guarantee favorable performance results and should not be construed as safety in an investment. 7

8 VIP Stable NAV Liquidity Pool Term Sheet Governance: VML/VACo VIP Board of Trustees Organizing Document: VIP Trust Agreement, as amended 9/23/16 Program Participants: Political Subdivisions of the Commonwealth of Virginia Administrator: Virginia Local Government Finance Corporation (d.b.a VML/VACo Finance) Investment Manager: Public Trust Advisors Transfer Agent & Fund Acctg: Public Trust Advisors Custodian: Wells Fargo Portfolio Objectives: 1) Safety Preservation of principal 2) Offer daily liquidity 3) Offer a competitive yield for overnight liquidity investment option Public Trust Advisors

9 VIP Stable NAV Liquidity Pool Term Sheet Benchmark: 3-Month U.S. Treasury / S&P AAA LGIP Index Investment Style: Prime Permitted Investments: Investments allowable under the Code of Virginia ( et. seq.) S&P Rating: AAAm Valuation: Daily; Stable $1.00 NAV Liquidity: Daily Public Trust Advisors

10 VIP Stable NAV Liquidity Pool Composition VIP Portfolio* Government 6% Repurchase Agreement 18% Negotiable CD s/ Bank 48% Commercial Paper 25% Municipal 0% Corporate 3% AUM $159,680,285 WAM (R) 46 Days Ratings A-1+ =56% / A-1 = 35% / AAA = 9% Net Yield (12/8/16) 0.62% High quality diversified portfolio offering daily liquidity Scale and technology provide cost advantages over other funds The fund s objective is to offer the highest yielding AAAm rated liquidity vehicle for Virginia investors Source Public Trust Advisors, LLC *as of 12/8/16 Public Trust Advisors

11 S&P PSFR Rating Matrix Guides Investing Maturity Non-Rated (2a7-Like) AAAm Rated VIP Stable Value Required VIP Stable Value Actual* Max Fund WAM (R) 60 days 60 days 60 days 46 days Max Fund WAM (F) 120 days 90* days 90* days 65 days Max maturity per security (Floating Government) Max maturity per security (Fixed & Floating Corp) Credit Quality None 2 years 2 years 2 years 397 days 397 days 397 days 397 days Minimum A-1+ allocation N/A 50% 50% 56% Maximum A-1 allocation N/A 50% 50% 35% Minimum A-2 allocation 3% 0% 0% 0% Pricing Frequency Discretionary Weekly Weekly Daily Diversification Max per Security 5% 5% 5% 3.13% Max per Repo Counterparty Unrestricted 50% - A1+/25% - A1 50% - A1+/25% - A1 20% - A1+ Minimum Liquidity Overnight / 7 days 10% / 30% N/A N/A N/A *As of December 8, 2016 Public Trust Advisors

12 Security Selection A rigorous relative value assessment and a disciplined research process drive security selection. We focus on the factors unique to each sector when evaluating securities for investment. Security Analysis Quantitative Analysis Fundamental Credit Research Qualitative Analysis Maturity Characteristics Security Structure Scenario Analysis Historical Spread Analysis Volatility Yield Curve Considerations Internal proprietary score Proactive Approach Industry Outlook Liquidity Supply Outlook Investor Demand Relative Value Assessment Identify securities with attractive risk/reward characteristics Security and market inefficiencies can be identified and captured Security Selection Produce Buy List Purchase Security Public Trust Advisors

13 VIP Liquidity Pool Administration The Public Trust LGIP Administration System is a hosted, scalable, customizable, highly automated back-office administration system that enables our team to focus on what is truly important; the needs of our LGIP participants. Public Trust has partnered with an industry leading technology provider to build a customized LGIP platform for transfer agency, shareholder accounting, fund accounting and online transactions. The administration system processed 4.6M transactions in To better serve our LGIP participants, the system is regularly upgraded: Recently completed user acceptance testing on a fund accounting release; Completed two upgrades to shareholder accounting module in Q4 2015; Additional shareholder accounting enhancement release scheduled for Q4 2016; Continued enhancements to LGIP participant reporting and the secure Web-based transaction solution for LGIP clients (MYACCESS). The Public Trust LGIP Administration System has been awarded a SSAE 16 SOC 1, Type II designation. 13

VIP Liquidity Pool Administration System Single platform, evolving toward end-to-end

Has the ability to provide customized shareholder accounting and reporting solutions.

or floating NAV funds Multi-fund schematics Integration with the tradeorder management system

fund characteristics Bank interface, automated wire & ACH upload Dividend feed from fund

14 VIP Liquidity Pool Administration System Single platform, evolving toward end-to-end processing. Services multiple funds with different cut-off times and investment mandates. Has the ability to provide customized shareholder accounting and reporting solutions. Its robust and highly-integrated nature improves processing times and helps control operating costs. Fund Accounting System Transfer Agency System Reporting System Tailorable to constant dollar or floating NAV funds Multi-fund schematics Integration with the tradeorder management system Daily marked-to-market Automated reconciliation Participant record-keeping Customizable to fund characteristics Bank interface, automated wire & ACH upload Dividend feed from fund accounting system Feeds live data to Reporting Web-based participant access to order entry, account records, fund information, etc. Live data from T/A Back-end admin reporting Statement and confirm generation 14

VIP Reporting System: MYACCESS Overview MYACCESS is Public Trust s online transaction system and reporting portal, created specifically for local government investment pool participants.

15 VIP Reporting System: MYACCESS Overview MYACCESS is Public Trust s online transaction system and reporting portal, created specifically for local government investment pool participants. High availability and increased levels of security. Live data from transfer agency system. A variety of cash management tools including participant-to-participant transfers and one-to-one bank relationships at sub-account level. Tablet-ready. 15

16 Public Trust LGIP Transaction System: MYACCESS Security MYACCESS runs on a Web server that queries a database, which is not on an internet facing server, but is instead in a safe-zone, which keeps the data storage secure. Uses a shell security system to protect the entire environment from unauthorized access and gives LGIP participants secure access to their information. Leans on Entrust Identity Guard for user authentication. Identity Guard has won industry awards for Best Multifactor Security Solution. Security expands to multiple levels (more than username and password), including but not limited to multifactor authentication as well as device and geographic location identification. The environment is monitored 24/7 by a live person to identify any attempted unauthorized access. Servers and data can be restored offline if a server requires patching, before being restored to online status. 16

17 VIP Key Contact Information VML/VACo Finance: (804) Robert Lauterberg: Steve Mulroy: James West: VIP Client Services: (855) Client Service Team: Public Trust Advisors: (407) Tom Tight: John Grady: 17

18 Additional Disclosure The investment advisor providing these services is Public Trust Advisors, LLC, an investment adviser registered with the SEC under the Investment Advisers Act of 1940, as amended. Registration with the SEC does not imply a certain level of skill or training. Additionally, this registration provides no guarantee of return or protection against loss. The data in this presentation is unaudited. Performance comparisons will be affected by changes in interest rates. Investment returns fluctuate due to changes in market conditions. Investment involves risk, including the possible loss of principal. No assurance can be given that the performance objectives of a given strategy will be achieved. Past Performance is no guarantee of future results. Any financial and/or investment decision may incur losses. Public Trust Advisors

VOLUNTARY GUIDELINES FOR THE MANAGEMENT OF STABLE NET ASSET VALUE (NAV) LOCAL GOVERNMENT INVESTMENT POOLS

VOLUNTARY GUIDELINES FOR THE MANAGEMENT OF STABLE NET ASSET VALUE (NAV) LOCAL GOVERNMENT INVESTMENT POOLS Recommended Best Practices for Stable NAV LGIPs FEBRUARY 26, 2016 This document offers best practices