SB402-SSA1,2,612 13.94 (1) (df) Annually, perform a financial audit of the investment board,
13including an assessment of the fair presentation of the financial statements and an
14evaluation of accounting controls and accounting records the internal control

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1structure of the board. As part of the financial audit, the bureau shall identify
2certain statutes and policies and guidelines adopted by the board and shall
3determine the extent of compliance by the board with the statutes, policies and
4guidelines. Biennially, the bureau shall conduct a performance evaluation audit of
5the investment board that includes an audit of the board's policies and management
6practices.

SB402-SSA1,2,98 13.94 (1s) (c) 3. The investment board for the cost of the any audit required to
9be performed under sub. (1) (df).

SB402-SSA1,2,1411 15.07 (2) (a) The chairperson and vice chairperson of the investment board
12shall be designated elected biennially by the governor from among the members
13appointed under s. 15.76 (2) who have had at least 10 years' experience in making
14investments.

SB402-SSA1,2,1716 15.07 (2) (k) The secretary of administration may not serve as chairperson of
17the investment board.

SB402-SSA1,2,22 1915.76 Investment board; creation. (intro.) There is created a state of
20Wisconsin investment board, to be known for statutory purposes as the investment
21board. The investment board shall consist of 8 members, as follows the following
22members:

SB402-SSA1,3,524 15.76 (1r) One member appointed for a 6-year term, who is a representative
25of a local government that participates in the local government pooled-investment

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1fund under s. 25.50. The member shall be employed by the local government in a
2finance position and have had at least 10 years of financial experience, but may not
3be an elected official. If the member appointed under this subsection loses the status
4upon which the appointment was based, he or she shall cease to be a member of the
5investment board.

SB402-SSA1,3,97 19.42 (10) (L) The executive director, executive assistant to the executive
8director, internal auditor, chief investment officer and investment directors of the
9investment board.

SB402-SSA1,3,12 10(13) (k) The executive director, executive assistant to the executive director,
11internal auditor, chief investment officer and investment directors of the investment
12board.

SB402-SSA1,3,1614 25.156 (2m) The investment board shall employe an internal auditor, who shall
15serve outside the classified service. The board shall fix the compensation of the
16internal auditor.

SB402-SSA1,3,2418 25.156 (4) The members of the board shall promulgate rules restricting the
19executive director, internal auditor, chief investment officer, investment directors
20and employes from having financial interest, directly or indirectly, in firms or
21corporations providing services to the department and governing the receipt of gifts
22or favors therefrom, and also governing personal investments of all employes
23including the executive director, internal auditor, chief investment officer and
24investment directors to prevent conflicts of interest.

SB402-SSA1,4,1

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125.156 (8) The investment board shall keep full minutes of its proceedings.

SB402-SSA1,4,83 25.16 (1) The executive and administrative functions of the investment board,
4except for the functions performed by the internal auditor under s. 25.165 (2), shall
5be vested in an executive director, who shall perform the functions of executive
6director in conformity with the requirements of the members of the board and in
7accordance with policies, principles and directives determined by the members of the
8board.

SB402-SSA1,4,2110 25.16 (2) The Subject to authorization under s. 16.505, the executive director
11may appoint one division administrator and investment directors and shall appoint
12a chief investment officer and all other employes necessary to carry out the functions
13of the investment board, except that the investment board shall appoint the internal
14auditor and shall participate in the selection of the chief investment officer and
15investment directors and the internal auditor shall appoint his or her staff. The
16executive director shall appoint all employes outside the classified service, except
17blue collar and clerical employes. Neither the executive director, the internal
18auditor, the chief investment officer, any investment director nor any other employe
19of the board shall have any financial interest, either directly or indirectly, in any firm
20engaged in the sale or marketing of real estate or investments of any kind, nor shall
21any of them render investment advice to others for remuneration.

SB402-SSA1,5,223 25.16 (4) The executive director shall take the official oath and the executive
24director, chief investment officer and each investment director shall file a bond for

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1the faithful performance of that person's duties in such amount and with such
2sureties as the members of the board require.

SB402-SSA1,5,14 425.165 Internal auditor. (1) There is created in the investment board an
5internal audit subunit, under the supervision of the internal auditor. The internal
6auditor shall report directly to the board and, subject to authorization under s.
716.505, shall appoint all employes necessary to carry out the duties of the internal
8auditor. The internal auditor shall appoint all employes outside the classified
9service, except blue collar and clerical employes. The internal auditor shall fix the
10compensation of all employes appointed by the internal auditor, subject to
11restrictions set forth in the compensation plan under s. 230.12 or any applicable
12collective bargaining agreement in the case of employes in the classified service, but
13the investment board may provide for bonus compensation to employes in the
14unclassified service as authorized under s. 25.156 (6).

SB402-SSA1,5,17 15(2) The internal auditor may review any activity, information or investment of
16the board and have access to records of the board and any external party under
17contract with the board and shall do all of the following:

SB402-SSA1,5,2018 (a) Plan and conduct audit activities, risk assessments, research projects and
19management reviews under the direction of the board and in accordance with
20policies, principles and directives determined by the board.

SB402-SSA1,5,2121 (b) Coordinate and assist with external audits and reviews of the board.

SB402-SSA1,6,222 (c) Monitor for compliance with applicable legal requirements and with the
23board's contractual agreements any bank, savings and loan association, savings
24bank or credit union with which the board has entered into a custodial agreement
25under s. 25.17 (11); any investment advisers with which the board has contracted to

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1manage and control board assets under s. 25.18 (2) (e); and any other external parties
2with which the board has contracted to provide investment services to the board.

SB402-SSA1,6,5 425.167 Chief investment officer. Under the supervision of the executive
5director, the chief investment officer shall do all of the following:

SB402-SSA1,6,8 6(1) Monitor activities of the investment directors for compliance with the
7board's investment policies and guidelines in investment decisions and approve
8unusual transactions, as defined by the board.

SB402-SSA1,6,10 9(2) Develop and implement operating procedures that are intended to ensure
10that the investment policies and guidelines of the board are followed.

SB402-SSA1,6,13 11(3) Ensure that investments are completely and accurately reported on all
12management and financial reports and that any information requested by the board
13is provided to the board on a timely basis.

SB402-SSA1,6,18 1525.17 Powers and duties of board. (intro.) The "State of Wisconsin
16Investment Board" shall be a body corporate with power to sue and be sued in said
17name. The board shall have a seal with the words, "State of Wisconsin Investment
18Board". The Subject to s. 25.183, the board shall:

SB402-SSA1,6,2520 25.17 (14g) Annually, on or before January 1, submit to the joint legislative
21audit committee, to the joint committee on finance and to the chief clerk of each
22house, for distribution to the appropriate standing committees under s. 13.172 (3),
23a report of the board's annual investment goals and long-term investment
24strategies. The report shall specify any change in the annual investment goals and
25long-term investment strategies from those in the previous year.

SB402-SSA1,7,52 25.17 (14m) Annually, on or before March 31, submit to the joint legislative
3audit committee, to the joint committee on finance and to the chief clerk of each
4house, for distribution to the appropriate standing committees under s. 13.172 (3),
5a report including all of the following:

SB402-SSA1,7,76 1. An assessment of the board's progress in meeting its annual investment
7goals established in the report under sub. (14g).

SB402-SSA1,7,148 2. Information on the types of investments held by the board, including the
9market values of the investments and the degree of risk associated with the
10investments, the board's use of derivatives, as defined in s. 25.183 (1) (a), any
11ventures by the board into new markets, any use of new investment instruments by
12the board and a comparison of the investment performance of the board to that
13achieved by a peer group of public and private entities that invest similar-sized
14funds.

SB402-SSA1,7,1715 3. A discussion of the amounts and categories of investments made within the
16state, including the amounts and categories of investments described, and progress
17in meeting the objectives of the plan submitted, under sub. (70).

SB402-SSA1,7,2319 25.17 (14r) Upon adopting any change in the board's investment policies or
20guidelines, submit to the joint legislative audit committee, to the joint committee on
21finance and to the chief clerk of each house, for distribution to the appropriate
22standing committees under s. 13.172 (3), a report summarizing the change in the
23investment policies or guidelines.

SB402-SSA1,8,8

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125.17 (51) Annually, have the legislative audit bureau conduct a financial audit
2to include, including an assessment of the fair presentation of the financial
3statements and an evaluation of accounting controls and accounting records the
4internal control structure of the board. As part of the financial audit, the legislative
5audit bureau shall identify certain statutes and policies and guidelines adopted by
6the board and shall determine the extent of compliance by the board with the
7statutes, policies and guidelines. The board shall reimburse the legislative audit
8bureau for the cost of audits required to be performed under this subsection.

SB402-SSA1,8,1310 25.17 (51m) Biennially, have the legislative audit bureau conduct a
11performance evaluation audit that includes an audit of the board's policies and
12management practices. The board shall reimburse the legislative audit bureau for
13the cost of audits required to be performed under this subsection.

SB402-SSA1,8,1615 25.18 (1) (intro.) In addition to the powers and duties enumerated in s. 25.17,
16but subject to s. 25.183, the investment board may:

SB402-SSA1,8,2019 25.18 (2) (intro.) In addition to the powers set forth in sub. (1) and s. 25.17, but
20subject to s. 25.183, the investment board may:

SB402-SSA1,9,722 25.18 (2) (e) Contract with and delegate to investment advisers the
23management and control over assets from any fund or trust delivered to such
24investment advisers for investment in real estate, mortgages, equities, debt of
25foreign corporations and debt of foreign governments, and pay such advisers fees

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1from the current income of the fund or trust being invested. No more than 10% 20%
2of the total assets of the fixed retirement investment trust or 10% 20% of the total
3assets of the variable retirement investment trust may be delivered to investment
4advisers. The board shall set performance standards for such investment advisers,
5monitor such investments to determine if performance standards are being met and
6if an investment adviser does not consistently meet the performance standards then
7terminate the contract with such investment adviser.

SB402-SSA1,9,9 925.183 Certain investments prohibited. (1) Definitions. In this section:

SB402-SSA1,9,1310 (a) "Derivative" means any financial contract or other instrument that derives
11its value from the value or performance of any security, currency exchange rate or
12interest rate or of any index or group of any securities, currency exchange rates or
13interest rates, but does not include any of the following:

SB402-SSA1,9,1614 1. Any security that is traded on a national securities exchange or on an
15automated interdealer quotation system sponsored by a securities association
16registered under 15 USC 78o-3, et seq.

SB402-SSA1,9,1817 2. Any forward contract which has a maturity at the time of issuance not
18exceeding 270 days.

SB402-SSA1,9,21193. Any contract of sale of a commodity, as defined under 7 USC 2, for future
20delivery, or any option on such a contract, traded or executed on a designated contract
21market and subject to regulation under 7 USC 1 to 26.

SB402-SSA1,9,2422 4. Any security of an open-end management investment company or
23investment trust, if the investment company or investment trust is registered under
2415 USC 80a-1 to 80a-64.

SB402-SSA1,9,2525 5. Any deposit held by a financial institution.

SB402-SSA1,10,1

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16. Any investment specifically authorized under s. 25.17 (3) (b) and (ba).

SB402-SSA1,10,62 6e. Any collateralized mortgage obligation or other asset-backed security
3which either has one of the 2 highest ratings given by a nationally recognized rating
4service or is backed or collateralized by insured instruments, guarantees or pledges
5of the federal government, this state or an agency of the federal government or this
6state.

SB402-SSA1,10,87 6m. Any transaction permitted under s. 25.18 (1) (n), if all of the following
8conditions are met at the time the transaction is entered into:

SB402-SSA1,10,119 a. The counterparty to the transaction is rated in, or has outstanding long-term
10debt which is rated in, one of the 2 highest ratings given by a nationally recognized
11rating service.

SB402-SSA1,10,1312 b. The transaction is used only for specified hedging or interest rate risk
13reduction purposes.

SB402-SSA1,10,1514 c. All of the board's payment obligations under the transaction are fully backed
15by distinctly identified assets held in the state investment fund.

SB402-SSA1,10,1716 7. Any financial contract or instrument that the board determines, by rule, is
17not a derivative.

SB402-SSA1,10,2018 (b) "Reverse repurchase agreement" means an agreement for the sale of
19securities by the board under which the board will repurchase those securities on or
20before a specified date and for a specified amount.

SB402-SSA1,11,3 21(2) Derivative investments. After the effective date of this subsection ....
22[revisor inserts date], the board may not purchase or acquire any derivative in the
23state investment fund except in accordance with rules promulgated by the board.
24Rules promulgated under this subsection may not permit the purchase or acquisition
25of derivatives in the state investment fund unless the purchase or acquisition is

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1made for the purpose of reducing risk of price changes or of interest rate or currency
2exchange rate fluctuations with respect to investments held or to be held by the
3board.

SB402-SSA1,11,7 4(3) Reverse repurchase agreements. After the effective date of this subsection
5.... [revisor inserts date], the board may not enter into any reverse repurchase
6agreement unless the repurchase of securities under the agreement is required to
7occur no later than the next business day.

SB402-SSA1,11,1910 25.50 (5) Investment policies. (intro.) The investment board shall formulate
11policies for the investment and reinvestment of moneys in the fund and the
12acquisition, retention, management and disposition of such investments. The board
13shall provide a copy of the investment policies, together with any guidelines adopted
14by the board to direct staff investment activity, to each local government having an
15investment in the fund upon the local government's request and at least annually to
16all investors. The board shall distribute at least annually performance information
17over the preceding one-year, 5-year and 10-year periods, compared with
18appropriate indices or benchmarks in the private sector. The investment policies
19shall include all of the following:

SB402-SSA1,11,2121 25.50 (5) (a) Any types of prohibited investments.

SB402-SSA1,11,2222 (b) Any restrictions on allocation of assets among various asset types.

SB402-SSA1,11,2323 (c) Credit standards for private companies in which the fund may invest.

SB402-SSA1,11,2424 (d) Dollar or percentage limits on investments in a single company or bank.