Established in 1996, the Texas Cooperative Liquid Assets Securities System Trust (Texas CLASS), was created as an investment pool for it participants pursuant to Section 2256.016
of the Public Funds Investment Act, Texas Government Code, through which entities may pool any of its
funds or funds under its control in order to preserve principal, to maintain the liquidity of the funds and
to maximize yield in accordance with Public Funds Investment Act (the “Act”), Section 2256.01, et seq., Texas
Government Code, or other laws of the State of Texas, from time to time in effect, governing the investment
of funds of a participant or funds under its control. The Texas CLASS Trust Agreement is an agreement of indefinite term
regarding the investment, reinvestment and withdrawal of local government funds. The parties to the Trust Agreement are
Texas local government entities that choose to participate (the “Participants”), Cutwater Investor
Services Corp. as Program Administrator (the “Program Administrator”), and Wells Fargo Bank Texas, NA as
Custodian (the “Custodian”).
Board of Trustees and Advisory Board:
Pursuant to the Trust Agreement, Texas CLASS is supervised by a Board of Trustees who are elected by the Participants. The Board of Trustees supervises the Trust and its affairs and acts as the liaison between the Participants, the Custodian and the Program Administrator. The Board administers the affairs of the Trust and enters into contracts and agreements on behalf to the Trust in order to effectuate the terms of the Trust Agreement. It also selects the consultants for Texas CLASS, including the Program Administrator and the Custodian, subject to the terms of the Trust Agreement.
The Board of Trustees is selected at the annual meeting of the Participants. Any representative may be nominated as Trustee. The number of Trustees to be selected shall be determined by the Participants at such meeting and shall be an odd number of three (3) or more. The Board of Trustees consists of the following seven members, serving two-year staggered terms.
Pursuant to Section 2256.016(g)(2), the Board of Trustees has appointed an Advisory Board composed of Participants and other persons who do not have a business relationship with the Trust and are qualified to advise the Trust. The Advisory Board provides advice to the Board of Trustees and the Program Administrator about the Investment Policy and Investment Strategy of the Trust and about other matters as requested by the Board of Trustees and the Program Administrator. The Advisory Board consists of the following three members, serving two-year staggered terms.
Program Service Providers:
In order to facilitate the business of Texas CLASS, and in conformance with the Act, the services of a Program Administrator and a Custodian are employed by the Trust. The duties of the Program Administrator and the Custodian are specifically set forth in the Trust Agreement.
Subject to the supervision of the Board of Trustees, the Program Administrator is responsible for advising the Board of Trustees concerning investments which appear to the Program Administrator to be advantageous to the Participants within the investment criteria set forth in the Trust Agreement.
Cutwater Investor Services Corp. serves as Program Administrator. Cutwater Investor Services Corp. is a subsidiary of Cutwater Asset Management one of the nation's largest providers of administrative and portfolio management services for local government investment pools. Cutwater Asset Management, with over $40 billion in assets under management, has extensive experience in all aspects of fixed-income investing and has been managing short-term government investment pools for nearly 20 years. Cutwater Asset Management manages and administers 12 public sector cash investment programs with total assets over $10 billion for 4,700 clients in 22 states and the Commonwealth of Puerto Rico. Cutwater Asset Management invests the Texas CLASS portfolio to emphasize safety, liquidity and yield, the hallmarks of effective public sector investment practices.
Cutwater Investor Services Corp. is an SEC-registered investment advisor. A copy of Part II of Cutwater Investor Services Corp. Form ADV, which is the Firm's written disclosure statement is available on the Document Center section of this Web site.
The Custodian is, among other things, responsible for the receipt and safekeeping of all cash, securities or
other assets comprising the cooperatively invested assets. Such assets are held for the benefit of the Trust
in the name of the Custodian or its nominee. The Custodian also collects the income on investments and allocates it in accordance with the instructions
from the Program Administrator and the provisions of the Trust Agreement. The Custodian is required to
hold the investments of the Trust separate and apart from other property of the Custodian and assure that
such property is never deemed an asset or liability of the Custodian.
Wells Fargo Bank Texas, N. A. serves as custodian for Texas CLASS. Wells Fargo Bank Texas, N. A. is part of Wells Fargo & Company, a diversified financial services company providing banking, insurance, investments, mortgage and consumer finance through almost 6,000 stores, the internet and other distribution channels across North America and internationally. Wells Fargo is rated AAA by Standard and Poor's and Moody's.
The legal firm of Vinson and Elkins LLC provides legal services to Texas CLASS. Audit services are provided by PricewaterhouseCoopers LLC.
Participation:
Eligible Participants are any municipality, county, school district or authority created under Section 52(b)(1)
or (2), Article III or Section 59, Article XVI, Texas Constitution, a fresh water supply district, a hospital
district and any political subdivision, authority, public corporation, body politic, or instrumentality of the
State of Texas, any office, department, commission, board, or other agency that is part of any branch of
State government, an institution of higher education, and any nonprofit corporation acting on behalf of
any of those entities that has taken the actions required by Section 2256.016 of the Act and that has
executed either the Trust Agreement or a counterpart of the Trust Agreement or a participation certificate.
Any local government entity that becomes a Participant has the same rights and obligations under the
Trust Agreement as other Participants. Each such Participant shall have the right to invest funds for credit
to such Participant’s account. There is no minimum amount that must be invested pursuant to the Trust
Agreement nor is there any limitation on the aggregate amount of funds that any Participant may invest at
one time. Similarly, each Participant has the right from time to time to request payment of an amount
equal to or less than the amount of funds in the Participant’s account. Subject to meeting the daily times
for giving notice, which times may be adjusted by the Program Administrator, there is no limitation on the
period of time that funds may be invested through the Trust prior to such payment. Upon receipt of any
payment request, the Program Administrator notifies the Custodian of the payment request from a
Participant and the requested amount is paid by the Custodian to, or on behalf of, such Participant not
later than the next business day, subject only to certain calamities or crises that may affect the financial
markets of the United States, as specified in the Trust Agreement.
Investment Objectives:
Under the Trust Agreement, there are four general objectives of the Trust: (i) Legality- investing only in investments legally permitted under Texas law; (ii) Safety- minimizing risk by managing portfolio investments so as to preserve principal and maintain a stable asset value and to maintain the highest rating for the Trust from a nationally recognized statistical rating organization for so long as such rating is required by Texas law; (iii) Liquidity- managing portfolio investments to ensure that cash will be available as required to finance Participants’ operations; and (iv) Yield- maximizing current income to the degree consistent with legality, safety and liquidity.
Permitted Investments:
Texas CLASS has been specifically designed for the use of Texas local government entities. Accordingly, the portfolio of Texas CLASS consists solely of securities in which such entities are permitted to invest funds pursuant to the Act. In addition, such securities must also be permitted by Rule 2a-7, even though Rule 2a-7 is not applicable to the Trust. All investment securities purchased for Texas CLASS, including those with repurchase agreements, are delivered to the Custodian and held for the benefit of the Trust and its Participants. Home rule city and county charters may have provision more restrictive than the Act regarding investments of its money and such restrictions may not be complied with by Texas CLASS. Any such restrictions are the sole responsibility of each Participant. The Trust may invest in any or all of the legal investments specified in Sections 2256.009 through 2256.016, of the Act (referred to herein as “Permitted Investments”). Such investments may include, without limitation, the following:
• U.S. Treasury Bills, Notes and Bonds
• Obligations of or guaranteed by U.S. Government Agencies and Instrumentalities
• State and local government Obligations (subject to limitation)
• Certificates of Deposits of a State or Nations Bank Domiciled in the State of Texas Guaranteed
or Insured by the FDIC
• Bankers’ Acceptances
• Mutual Funds
• Repurchase Agreements
• Highly Rated Commercial Paper
• Guaranteed Investment Contracts (Bond Proceeds Only)
The Board of Trustees has adopted an Investment Policy and Investment Strategy, that further specify's the types of investments in which the monies of Texas CLASS may be invested and reinvested. A copy of the Investment Policy is available in the Document Center section of this Web site.
Letter of Credit:
The Program Administrator is required pursuant to the Trust Agreement to provide a letter of credit for the
benefit of the Trust. The letter of credit currently outstanding is issued by Deutsche Bank. The
amount of the letter of credit is $5,000,000 as of the date of this Information Statement. Thereafter, the
amount of the letter of credit is required to be equal to the lesser of: (i) the difference between the value
of the Trust assets determined by the amortized cost method of valuation and the mark to market or
matrix valuation method, but only if the value, based upon the amortized cost method is higher than the
value based upon the other methods, or (ii) one percent of the value of the Trust assets. The Program
Administrator is required to cause the letter of credit to be drawn in the event that the proceeds of the
sale of the assets of the Trust are insufficient to fund the payment of a Participant’s Balance as requested
pursuant to the Trust Agreement or in the event that the Trust would otherwise fail to meet the valuation
deviation standards for money market funds employing the amortized cost method of valuation set forth in
Rule 2a-7 (“Rule 2a-7”), as amended from time to time, promulgated by the United States Securities and
Exchange Commission pursuant to the Investment Company Act of 1940, as amended, as if such Rule
were applicable to the Trust.