Custodian Oversight
A document to list the requirements and authorized signers to approve wires for different types of investment activities based on the General Authority Resolutions (GAR) approved by the TRS Board of Trustees.
What is File Transfer and Transaction Origination Policy (FFTOP)?
A fair value hierarchy and reporting standard promulgated by the Governmental Accounting Standard Board that government entities must follow when reporting the fair value of their investment assets and liabilities. Fair value hierarchy includes Levels 1, 2, and 3, as well as Net Asset Value (NAV) per share.
What is GASB Statement No. 72?
State Street Bank’s real-time, multi-currency accounting system, which is also the official book of records for TRS’ investment activity ledgers. Investment Accounting team reconciles ledger balances in CAPPS to MCH ledger balances on a daily and monthly basis.
What is Multi-Currency HORIZON (MCH)?
A legally binding contract between general partners (GPs), who manage the business with unlimited liability, and limited partners (LPs), who provide capital with liability capped at their investment. TRS forms this type of agreement for the investments in alternative investments (e.g., Private Equity, Real Estate, Energy, Natural Resources, Infrastructure, Hedge Fund, etc.) TRS is the limited partner in all limited partnerships.
What is a Limited Partnership Agreement?
TRS strives to offer a competitive compensation package to remain competitive in its efforts to attract and retain high caliber Investment Management Division (IMD) employees to maximizing real, longterm returns for funds invested and managed by TRS while assuming appropriate levels of risk
What are the Objectives of Performance Pay Plan (Formerly PIP)?
A list of key performance indicators (KPIs) that State Street Bank and TRS have agreed to use as a basis to measure State Street Bank’s performance.
What is a Service Level Agreement (SLA)?
The potential for financial loss, reduced earnings, or decreased capital value caused by fluctuations in market interest rates.
What is Interest Rate Risk?
For the months from October to July, the accounting period is closed on the 9th business day.
When is Regular Accounting Period Close in State Street Bank?
A legally binding promise by an investor (Limited Partner) to provide a specific amount of capital to a fund in a specific period of time (e.g.,10–15 years), usually drawn down in stages (capital calls) rather than all at once.
What is Commitment, or Committed Capital?
October 1st to September 30th.
When is the Performance Period for Performance Pay Plan?
A module available in State Street Bank that TRS can utilize to set up the workflows for approval accounting entries and outgoing wires to pay invoices and make contributions to alternative investments.
What is Electronic Cash Flow Module (eCFM)?
An investment return calculation factors in the timing and size of cash inflows/outflows, reflecting the actual personal return experienced by an investor.
What is Money-weighted Return?
State Street Bank maintains a detailed subledger to report all investment transactions related to assets, labilities, income, and expenses by investment holdings. Investment Accounting team reconciles the details in this subledger to the aggregate total reported in State Street Bank’s ledger to ensure the accuracy and completeness of investment reporting in State Street Bank’s general ledger.
What is State Street Bank Investment Subledger?
The market values of alternative investments from the most recent capital statements are adjusted with the cash flows subsequent to the capital statement date for reporting.
What is Cash Adjusted Market Value?
What are the weights of performance measurement period?
A contract with a financial institution who assumes the fiduciary duties to safeguard TRS’ investment assets and provides custody services, which include but not limit to safekeeping (except alternative investments), trade settlement, security registration, and compliance services.
What is a Custody Service Agreement?
The potential for financial loss or reduced profitability due to fluctuations in exchange rates when operating, investing, or trading across borders.
What is Foreign Currency Risk?
The additional close September is designed to capture as much current market value information about our alternative investments as possible to calculate the most current investment returns to determine the awards under the Performance Pay Plan.
What is an extended close?
The share of profits that general partners (GPs) receive as performance-based compensation, aligning their incentives with investors (limited partners). It is only paid after the fund returns all invested capital and hits a predetermined hurdle rate.
What is Carried Interest?
The difference between expected investment return and the benchmark indices, or peer group performance. For example, if we expect our investment return will be 1% above the index return, the target is 1%.
What is Excess Return Target?
Over 890.
What is the number of mappings to translate State Street Bank ledger accounts to the corresponding ledger accounts in CAPPS?
General guidelines provided by GFOA to assist government entities to prepare their Annual Comprehensive Financial Report. Investment Accounting team follows these guidelines to prepare Note 3 and Investment Section of ACFR.
What is the Government Financial Officers Association (GFOA) Checklist?
Over 1,100.
What is the number of reconciliations for alternative investments.
A common provision where a fund retains a portion of an investor’s redeemed capital (typically 5%–10%) until the annual audit is finalized. This mechanism acts as protection for the fund against subsequent adjustments to the net asset value (NAV), often delaying the final, fully liquidated payment for up to 18 months.
What is Hedge Fund Holdback?
Base salary x Maximum Potential Award Percentage x Performance Component Weights x Target Realization Percentage for quantitative component, or Qualitative Scoring for qualitative component.
What is the general formula for calculating the Potential Award?