AB664, s. 2 10Section 2. 13.94 (1s) (c) 3. of the statutes is amended to read:
AB664,5,1211 13.94 (1s) (c) 3. The investment board for the cost of the any audit required to
12be performed under sub. (1) (df).
AB664, s. 3 13Section 3. 15.07 (2) (a) of the statutes is repealed.
AB664, s. 4 14Section 4. 15.76 (intro.) of the statutes is amended to read:
AB664,5,18 1515.76 Investment board; creation. (intro.) There is created a state of
16Wisconsin investment board, to be known for statutory purposes as the investment
17board. The investment board shall consist of 8 members, as follows the following
18members
:
AB664, s. 5 19Section 5. 15.76 (1r) of the statutes is created to read:
AB664,5,2420 15.76 (1r) One member appointed for a 6-year term, who is a representative
21of a local government that participates in the local government pooled-investment
22fund under s. 25.50 and that has a population of less than 150,000. The member shall
23be employed by the local government in a finance position and have had at least 10
24years of financial experience, but may not be an elected official.
AB664, s. 6 25Section 6. 19.42 (10) (L) and (13) (k) of the statutes are amended to read:
AB664,6,3
119.42 (10) (L) The executive director, executive assistant to the executive
2director, internal auditor, chief investment officer and investment directors of the
3investment board.
AB664,6,6 4(13) (k) The executive director, executive assistant to the executive director,
5internal auditor, chief investment officer
and investment directors of the investment
6board.
AB664, s. 7 7Section 7. 25.156 (2m) of the statutes is created to read:
AB664,6,108 25.156 (2m) The investment board shall employe an internal auditor, who shall
9serve outside the classified service. The board shall fix the compensation of the
10internal auditor.
AB664, s. 8 11Section 8. 25.156 (4) of the statutes is amended to read:
AB664,6,1812 25.156 (4) The members of the board shall promulgate rules restricting the
13executive director, internal auditor, chief investment officer, investment directors
14and employes from having financial interest, directly or indirectly, in firms or
15corporations providing services to the department and governing the receipt of gifts
16or favors therefrom, and also governing personal investments of all employes
17including the executive director, internal auditor, chief investment officer and
18investment directors to prevent conflicts of interest.
AB664, s. 9 19Section 9. 25.156 (8) of the statutes is created to read:
AB664,6,2020 25.156 (8) The investment board shall keep full minutes of its proceedings.
AB664, s. 10 21Section 10. 25.16 (1) of the statutes is amended to read:
AB664,7,222 25.16 (1) The executive and administrative functions of the investment board,
23except for the functions performed by the internal auditor under s. 25.165 (2),
shall
24be vested in an executive director, who shall perform the functions of executive
25director in conformity with the requirements of the members of the board and in

1accordance with policies, principles and directives determined by the members of the
2board.
AB664, s. 11 3Section 11. 25.16 (2) of the statutes is amended to read:
AB664,7,154 25.16 (2) The Subject to authorization under s. 16.505, the executive director
5may appoint one division administrator and investment directors and shall appoint
6a chief investment officer and all other employes necessary to carry out the functions
7of the investment board, except that the investment board shall appoint the internal
8auditor and
shall participate in the selection of the chief investment officer and
9investment directors and the internal auditor shall appoint his or her staff. The
10executive director shall appoint all employes outside the classified service, except
11blue collar and clerical employes. Neither the executive director, the internal
12auditor, the chief investment officer,
any investment director nor any other employe
13of the board shall have any financial interest, either directly or indirectly, in any firm
14engaged in the sale or marketing of real estate or investments of any kind, nor shall
15any of them render investment advice to others for remuneration.
AB664, s. 12 16Section 12. 25.16 (4) of the statutes is amended to read:
AB664,7,2017 25.16 (4) The executive director shall take the official oath and the executive
18director, chief investment officer and each investment director shall file a bond for
19the faithful performance of that person's duties in such amount and with such
20sureties as the members of the board require.
AB664, s. 13 21Section 13. 25.165 of the statutes is created to read:
AB664,8,7 2225.165 Internal auditor. (1) There is created in the investment board an
23internal audit subunit, under the supervision of the internal auditor. The internal
24auditor shall report directly to the board and, subject to authorization under s.
2516.505, shall appoint all employes necessary to carry out the duties of the internal

1auditor. The internal auditor shall appoint all employes outside the classified
2service, except blue collar and clerical employes. The internal auditor shall fix the
3compensation of all employes appointed by the internal auditor, subject to
4restrictions set forth in the compensation plan under s. 230.12 or any applicable
5collective bargaining agreement in the case of employes in the classified service, but
6the investment board may provide for bonus compensation to employes in the
7unclassified service as authorized under s. 25.156 (6).
AB664,8,10 8(2) The internal auditor may review any activity, information or investment of
9the board and have access to records of the board and any external party under
10contract with the board and shall do all of the following:
AB664,8,1311 (a) Plan and conduct audit activities, risk assessments, research projects and
12management reviews under the direction of the board and in accordance with
13policies, principles and directives determined by the board.
AB664,8,1414 (b) Coordinate and assist with external audits and reviews of the board.
AB664,8,2015 (c) Monitor for compliance with applicable legal requirements and with the
16board's contractual agreements any bank, savings and loan association, savings
17bank or credit union with which the board has entered into a custodial agreement
18under s. 25.17 (11); any investment advisers with which the board has contracted to
19manage and control board assets under s. 25.18 (2) (e); and any other external parties
20with which the board has contracted to provide investment services to the board.
AB664, s. 14 21Section 14. 25.167 of the statutes is created to read:
AB664,8,23 2225.167 Chief investment officer. Under the supervision of the executive
23director, the chief investment officer shall do all of the following:
AB664,9,3
1(1) Monitor activities of the investment directors for compliance with the
2board's investment policies and guidelines in investment decisions and approve
3unusual transactions, as defined by the board.
AB664,9,5 4(2) Develop and implement operating procedures that are intended to ensure
5that the investment policies and guidelines of the board are followed.
AB664,9,8 6(3) Ensure that investments are completely and accurately reported on all
7management and financial reports and that any information requested by the board
8is provided to the board on a timely basis.
AB664, s. 15 9Section 15. 25.17 (intro.) of the statutes is amended to read:
AB664,9,13 1025.17 Powers and duties of board. (intro.) The "State of Wisconsin
11Investment Board" shall be a body corporate with power to sue and be sued in said
12name. The board shall have a seal with the words, "State of Wisconsin Investment
13Board". The Subject to s. 25.183, the board shall:
AB664, s. 16 14Section 16. 25.17 (14g) of the statutes is created to read:
AB664,9,2015 25.17 (14g) Annually, on or before January 1, submit to the joint legislative
16audit committee and to the chief clerk of each house, for distribution to the
17appropriate standing committees under s. 13.172 (3), a report of the board's annual
18investment goals and long-term investment strategies. The report shall specify any
19change in the annual investment goals and long-term investment strategies from
20those in the previous year.
AB664, s. 17 21Section 17. 25.17 (14m) of the statutes is repealed and recreated to read:
AB664,9,2522 25.17 (14m) Annually, on or before March 31, submit to the joint legislative
23audit committee and to the chief clerk of each house, for distribution to the
24appropriate standing committees under s. 13.172 (3), a report including all of the
25following:
AB664,10,2
11. An assessment of the board's progress in meeting its annual investment
2goals established in the report under sub. (14g).
AB664,10,93 2. Information on the types of investments held by the board, including the
4market values of the investments and the degree of risk associated with the
5investments, the board's use of derivatives, as defined in s. 25.183 (1) (a), any
6ventures by the board into new markets, any use of new investment instruments by
7the board and a comparison of the investment performance of the board to that
8achieved by a peer group of public and private entities that invest similar-sized
9funds.
AB664,10,1210 3. A discussion of the amounts and categories of investments made within the
11state, including the amounts and categories of investments described, and progress
12in meeting the objectives of the plan submitted, under sub. (70).
AB664, s. 18 13Section 18. 25.17 (14r) of the statutes is created to read:
AB664,10,1714 25.17 (14r) Upon adopting any change in the board's investment policies or
15guidelines, submit to the joint legislative audit committee and to the chief clerk of
16each house, for distribution to the appropriate standing committees under s. 13.172
17(3), a report summarizing the change in the investment policies or guidelines.
AB664, s. 19 18Section 19. 25.17 (51) of the statutes is amended to read:
AB664,11,219 25.17 (51) Annually, have the legislative audit bureau conduct a financial audit
20to include, including an assessment of the fair presentation of the financial
21statements and an evaluation of accounting controls and accounting records the
22internal control structure
of the board. As part of the financial audit, the legislative
23audit bureau shall identify certain statutes and policies and guidelines adopted by
24the board and shall determine the extent of compliance by the board with the

1statutes, policies and guidelines.
The board shall reimburse the legislative audit
2bureau for the cost of audits required to be performed under this subsection.
AB664, s. 20 3Section 20. 25.17 (51m) of the statutes is created to read:
AB664,11,74 25.17 (51m) Biennially, have the legislative audit bureau conduct a
5performance evaluation audit that includes an audit of the board's policies and
6management practices. The board shall reimburse the legislative audit bureau for
7the cost of audits required to be performed under this subsection.
AB664, s. 21 8Section 21. 25.18 (1) (intro.) of the statutes is amended to read:
AB664,11,109 25.18 (1) (intro.) In addition to the powers and duties enumerated in s. 25.17,
10but subject to s. 25.183,
the investment board may:
AB664, s. 22 11Section 22. 25.18 (1) (L) of the statutes is repealed.
AB664, s. 23 12Section 23. 25.18 (2) (intro.) of the statutes is amended to read:
AB664,11,1413 25.18 (2) (intro.) In addition to the powers set forth in sub. (1) and s. 25.17, but
14subject to s. 25.183
, the investment board may:
AB664, s. 24 15Section 24. 25.18 (2) (e) of the statutes is amended to read:
AB664,12,216 25.18 (2) (e) Contract with and delegate to investment advisers the
17management and control over assets from any fund or trust delivered to such
18investment advisers for investment in real estate, mortgages, equities, debt of
19foreign corporations and debt of foreign governments, and pay such advisers fees
20from the current income of the fund or trust being invested. No more than 10% 20%
21of the total assets of the fixed retirement investment trust or 10% 20% of the total
22assets of the variable retirement investment trust may be delivered to investment
23advisers. The board shall set performance standards for such investment advisers,
24monitor such investments to determine if performance standards are being met and

1if an investment adviser does not consistently meet the performance standards then
2terminate the contract with such investment adviser.
AB664, s. 25 3Section 25. 25.183 of the statutes is created to read:
AB664,12,4 425.183 Certain investments prohibited. (1) Definition. In this section:
AB664,12,85 (a) "Derivative" means any financial contract or other instrument that derives
6its value from the value or performance of any security, currency exchange rate or
7interest rate or of any index or group of any securities, currency exchange rates or
8interest rates, but does not include any of the following:
AB664,12,119 1. Any security that is traded on a national securities exchange or on an
10automated interdealer quotation system sponsored by a securities association
11registered under 15 USC 78o-3, et seq.
AB664,12,1312 2. Any forward contract which has a maturity at the time of issuance not
13exceeding 270 days.
AB664,12,16143. Any contract of sale of a commodity, as defined under 7 USC 2, for future
15delivery, or any option on such a contract, traded or executed on a designated contract
16market and subject to regulation under 7 USC 1 to 26.
AB664,12,1917 4. Any security of an open-end management investment company or
18investment trust, if the investment company or investment trust is registered under
1915 USC 80a-1 to 80a-64.
AB664,12,2020 5. Any deposit held by a financial institution.
AB664,12,2121 6. Any investment specifically authorized under s. 25.17 (3) (b) and (ba).
AB664,13,222 6e. Any collateralized mortgage obligation or other asset-backed security
23which either has one of the 2 highest ratings given by a nationally recognized rating
24service or is backed or collateralized by insured instruments, guarantees or pledges

1of the federal government, this state or an agency of the federal government or this
2state.
AB664,13,43 6m. Any transaction permitted under s. 25.18 (1) (n), if all of the following
4conditions are met at the time the transaction is entered into:
AB664,13,75 a. The counterparty to the transaction is rated in, or has outstanding long-term
6debt which is rated in, one of the 2 highest ratings given by a nationally recognized
7rating service.
AB664,13,98 b. The transaction is used only for specified hedging or interest rate risk
9reduction purposes.
AB664,13,1110 c. All of the board's payment obligations under the transaction are fully backed
11by distinctly identified assets held in the state investment fund.
AB664,13,1312 7. Any financial contract or instrument that the board determines, by rule, is
13not a derivative.
AB664,13,1614 (b) "Reverse repurchase agreement" means an agreement for the sale of
15securities by the board under which the board will repurchase those securities on or
16before a specified date and for a specified amount.
AB664,13,24 17(2) Derivative investments. After the effective date of this subsection ....
18[revisor inserts date], the board may not purchase or acquire any derivative in the
19state investment fund except in accordance with rules promulgated by the board.
20Rules promulgated under this subsection may not permit the purchase or acquisition
21of derivatives in the state investment fund unless the purchase or acquisition is
22made for the purpose of reducing risk of price changes or of interest rate or currency
23exchange rate fluctuations with respect to investments held or to be held by the
24board.
AB664,14,4
1(3) Reverse repurchase agreements. After the effective date of this subsection
2.... [revisor inserts date], the board may not enter into any reverse repurchase
3agreement unless the repurchase of securities under the agreement is required to
4occur no later than the next business day.
AB664, s. 26 5Section 26. 25.50 (5) of the statutes is renumbered 25.50 (5) (intro.) and
6amended to read:
AB664,14,167 25.50 (5) Investment policies. (intro.) The investment board shall formulate
8policies for the investment and reinvestment of moneys in the fund and the
9acquisition, retention, management and disposition of such investments. The board
10shall provide a copy of the investment policies, together with any guidelines adopted
11by the board to direct staff investment activity, to each local government having an
12investment in the fund upon the local government's request and at least annually to
13all investors. The board shall distribute at least annually performance information
14over the preceding one-year, 5-year and 10-year periods, compared with
15appropriate indices or benchmarks in the private sector. The investment policies
16shall include all of the following:
AB664, s. 27 17Section 27. 25.50 (5) (a) to (d) of the statutes are created to read:
AB664,14,1818 25.50 (5) (a) Any types of prohibited investments.
AB664,14,1919 (b) Any restrictions on allocation of assets among various asset types.
AB664,14,2020 (c) Credit standards for private companies in which the fund may invest.
AB664,14,2121 (d) Dollar or percentage limits on investments in a single company or bank.
AB664, s. 28 22Section 28. 25.50 (5m) of the statutes is created to read:
AB664,15,623 25.50 (5m) Monthly reporting requirements. (a) The board, in cooperation
24with the department of administration, shall provide information necessary for the
25state treasurer to provide a monthly report to each local government having an

1investment in the fund. The board shall provide the information to the state
2treasurer in time to allow the treasurer to mail or electronically transmit the report
3to the local government no later than 6 business days after the end of the month
4covered by the report. The report shall include information on the fund's earnings
5for the month, with comparison to appropriate indices or benchmarks in the private
6sector.
AB664,15,117 (b) Upon request of any local government having an investment in the fund,
8the board shall provide a summary of securities held by the fund, including for each
9type of security, its cost, current value and, in the case of debt instruments, the
10average maturity. The board shall provide the information as soon as practicable
11after receiving the request.
AB664, s. 29 12Section 29. Nonstatutory provisions.
AB664,15,17 13(1) Alternative insurance arrangements for the local government-pooled
14investment fund
. No later than December 31, 1995, or the first day of the 2nd month
15beginning after publication, whichever is later, the investment board shall report to
16the joint legislative audit committee on alternative insurance arrangements for the
17local government pooled-investment fund under section 25.50 of the statutes.
AB664,15,18 18(2) Submission of investment board reports.
AB664,15,24 19(a) Notwithstanding the deadline for the submission of the report of the
20investment board's annual investment goals and long-term investment strategies
21that is specified in section 25.17 (14g) of the statutes, as created by this act, the
22investment board, for the 1996 calendar year, shall submit the report on or before
23January 1, 1996, or on or before the first day of the 2nd month beginning after
24publication, whichever is later.
AB664,16,5
1(b) Notwithstanding the deadline for the submission of the report of the
2investment board that is specified in section 25.17 (14m) of the statutes, as affected
3by this act, the investment board shall submit the report for 1995 on or before March
431, 1996, or on or before the first day of the 2nd month beginning after publication,
5whichever is later.
AB664,16,8 6(3) Investment board officers. The officers of the investment board
7designated by the governor under section 15.07 (2) (a), 1993 stats., shall cease to hold
8the designated offices on the effective date of this subsection.
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