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Local Government Investment Pool - Frequently Asked Questions


What is the Local Government Investment Pool program?
The Local Government Investment Pool program is comprised of two portfolios: the LGIP portfolio is designed to meet participants daily operational cash management needs and the LGIP EM portfolio is designed to meet the longer term investment needs of Virginia’s public funds investors. Statutory authority is granted by the Code of Virginia "Local Government Investment Pool Act" (§§2.2-4600 et seq.).

Who manages the Local Government Investment Pool portfolios?
The Investment Division of the Virginia Department of the Treasury manages the LGIP and the LGIP EM portfolios (§2.2-4602).

Who can invest in the Local Government Investment Pool portfolios?
Treasurers or any other person collecting, disbursing, or otherwise handling public funds are authorized to invest in the Local Government Investment Pool portfolios (§2.2-4601).

What are the permitted investments for the Local Government Investment Pool portfolios?
The Treasury Board of the Commonwealth sets the investment policies for the LGIP and the LGIP EM. The policies adhere to the requirements of the Code of Virginia "Investment of Public Funds Act" (§§2.2-4500 et seq.) with the Treasury Board imposing further limits and restrictions.

What are the LGIP portfolio investment objectives?
The LGIP investment objectives in priority order are safety, liquidity, and return. The LGIP is managed in accordance with Statement No. 79 of the Governmental Accounting Standards Board. The LGIP is rated ‘AAAm' by Standard & Poor’s (S&P) and in compliance with their ‘AAAm’ requirements. Performance benchmarks include iMoneyNet Money Fund Monitor Taxable Institutional monthly average yield and the Treasury 3-month Constant Maturity monthly average yield from the Federal Reserve Statistical Release H.15.

What are the LGIP EM portfolio investment objectives?
The LGIP EM investment objectives in priority order are safety, liquidity, and return. The LGIP EM is structured to provide an investment vehicle for those Virginia public entities who wish to invest monies not needed for daily liquidity. The LGIP EM will hold only high quality fixed income securities with a maximum maturity of five years and an expected weighted average maturity of one year. The LGIP EM is expected to be rated ‘AAAf’/S1 by S&P and signifies that the credit quality of a fund’s portfolio exposure is extremely strong. The LGIP EM performance benchmark is the Bank of America Merrill Lynch U.S. 1-Year Treasury Bill Index plus 15 basis points.

How do the characteristics of the LGIP compare to the LGIP EM?
The LGIP portfolio is structured to provide daily liquidity, a stable Net Asset Value, and a competitive rate of return. The LGIP EM portfolio is structured to provide weekly liquidity, a fluctuating Net Asset Value, and a competitive rate of return.

What fees do the LGIP and LGIP EM portfolios charge?
The LGIP and the LGIP EM management fees are totally transparent to participants. For the LGIP portfolio there is a four-basis point annualized management fee and for the LGIP EM portfolio the annualized management fee is eight basis points. On an annual basis, the fee for each $1,000 invested in the LGIP is $0.40 and for the LGIP EM portfolio it is $0.80. All yields quoted to participants are net of fees and there are no additional fees or expenses paid by participants.

How do I open an account?
Opening an account with the LGIP and/or the LGIP EM requires submission of a properly completed application signed by the public official responsible for the funds. Go to www.trs.virginia.gov/documents/cash/LGIPApplication.pdf to download the LGIP Application or telephone us at (800) 643-7800 to request a packet of information. The completed application should be mailed to:

LGIP
C/O Treasurer of Virginia
Cash Management and Investments
P.O. Box 1879 Richmond, VA 23218-1879

Accounts can be opened via fax, but an original copy must follow promptly thereafter and must be on file before withdrawal requests can be honored.

Is there a minimum opening investment balance?
Yes. The LGIP requires an opening deposit of $1,000 and a minimum balance of $1 is required to keep an account open. The LGIP EM requires an opening deposit of $25,000 and a minimum account balance of $25,000.

How many accounts can I open?
There is no set limit for either the LGIP or the LGIP EM. However, a separate application must be completed for each individual account and each must maintain the minimum investment balance requirement.

How do I initiate a Purchase or Redemption request in the Local Government Investment Pool Program?

PURCHAS SHARES

LGIP LGIP EM
By Wire: To receive same day credit for your funds you must notify Virginia Treasury staff by 10:00 a.m. that you plan to wire funds that day. Treasury staff can be notified either online by creating a BUY transaction in the FMS system or via telephone at (800) 643-7800 or (804) 786-1156.

Wire funds to:
Bank of America
100 N Tryon St, STE 170
Charlotte, NC
ABA #026009593
Account Name: LGIP
Account # 000002236801
FBO: Your LGIP Account Name and Fund Number
By Wire: Share purchases in the LGIP EM portfolio are only accepted on Wednesday. Virginia Treasury staff must be notified by 10:00 a.m. that you plan to wire funds that day. At this time notification to Treasury staff must be via telephone at (800) 643-7800 or (804) 786-1156.

Wire funds to:
Bank of America
100 N Tryon St, STE 170
Charlotte, NC
ABA #026009593
Account Name: LGIP
Account # 000002236801
FBO: Your LGIP EM Account Name and Fund Number
Reference the LGIP Program Investment Circular for additional purchase options and instructions.

REDEEM SHARES

LGIP LGIP EM
Redemption requests are accepted up to 10:00 a.m. for same day funds. Notify Virginia Treasury staff either online by creating a SELL transaction in the FMS system or via telephone at (800) 643-7800 or (804) 786-1156. Requests received after 10:00 a.m. will be processed the next business day. Withdrawal requests can only be accepted from authorized callers listed on the application and all bank accounts must be registered in the name of the public entity. Third party transactions are not permitted. The funds will be wired per the application instructions. Redemptions from the LGIP EM can be made weekly only on Wednesdays provided a valid redemption request is received at least five business days in advance. Requests received less than five business days in advance will be processed the following Wednesday, e.g. one week later. Treasury staff must be notified via telephone at (800) 643-7800 or (804) 786-1156. Withdrawal requests can only be accepted from authorized callers listed on the application. The funds will be wired per the application instructions.

Is there a minimum transaction amount?
No, but we do want to remind you that the LGIP and LGIP EM portfolios incur fees associated with wires. You may also incur fees from your financial institution.

Is there a limit to the number of transactions I can do in one day?
No.

What is the difference between the average yield and effective yield?
The average yield is the simple average of the daily yields for the current month. The effective yield reflects compounding, which assumes monthly dividends are reinvested at the current rate throughout a twelve-month period.

When are the statements mailed?
The statements are printed and mailed by the fifth business day of each month. Statements are also available on the web using the online application called FANWEB. If you are not set-up for FANWEB access, please contact Treasury staff.

Can I consolidate accounts on a single statement and will both my LGIP and LGIP EM accounts be on the same statement?
Yes. Individual accounts can be consolidated on the same statement. The statement will have summary information as well as individual account information. LGIP EM accounts will appear on your statement as a separate fund.

When are my earnings credited to my account?
The monthly dividend is posted to accounts on the last business day of each month.