A BILL TO BE ENTITLED
AN ACT relating to administration of the state treasurer's investment programs.
The General Assembly of North Carolina enacts:
SECTION 1.  G.S. 147‑69.3(g) reads as rewritten:
"(g)	The State Treasurer is authorized to retain the services of independent appraisers, auditors, actuaries, attorneys, investment counseling firms, investment managers, statisticians, custodians, or other persons or firms possessing specialized skills or knowledge necessary for the proper administration of investment programs created pursuant to this section. The retention of investment managers in connection with the administration of investments described in G.S. 147‑69.2(b)(4), (b)(6), (b)(7), and (b)(8) is subject to the requirements of those subdivisions."
SECTION 2.  G.S. 147‑69.2(b) through (b5) reads as rewritten:
"(b)	It shall be the duty of the State Treasurer to invest the cash of the funds enumerated in subsection (a) of this section in excess of the amount required to meet the current needs and demands on such funds, selecting from among the following:
(1)	Any of the investments authorized by G.S. 147‑69.1(c)(1)‑(7).
(2)	General obligations of other states of the United States.
(3)	General obligations of cities, counties and special districts in North Carolina.
(4)	Obligations of any company, other organization or legal entity incorporated or otherwise created or located within or outside the United States if the obligations bear one of the four highest ratings of at least one nationally recognized rating service and do not bear a rating below the four highest by any nationally recognized rating service which rates the particular security; such investments may be made (i) directly by the State Treasurer, (ii) through investment companies registered under the "Investment Company Act of 1940," individual, common, or collective trust funds of banks and trust companies, group trusts and limited partnerships, limited liability companies, or other limited liability investment vehicles that invest substantially all of their assets in investments authorized by subdivisions (b)(1) through (b)(6) of this section and (iii) through contractual arrangements in which the investment manager has full and complete discretion and authority to invest assets specified in such arrangements in investments authorized by subdivisions (b)(1) through (b)(6); provided that the investment manager has assets under management of at least one hundred million dollars ($100,000,000).
(4a)	Bonds of the State of Israel registered under the Securities Act of 1933.
(5)	Repealed by Session Laws 2001‑444, s. 2, effective October 1, 2001.
(6)	Asset‑backed securities (whether considered debt or equity) provided they bear ratings by nationally recognized rating services as provided in subdivision (b)(4) of this section and that they do not bear a rating below the four highest by any nationally recognized rating service that rates the particular  securities; such investments may be made (i) directly by the State Treasurer, (ii) through investment companies registered under the Investment Company Act of 1940, individual, common, or collective trust funds of banks and trust companies, group trusts and limited partnerships, limit liability companies or other limited liability investment vehicles that invest substantially all of their assets in investments authorized by subdivisions (b)(1) through (b)(6) of this section and through contractual arrangements in which the investment manager has full and complete discretion and authority to invest assets specified in such arrangements in investments authorized by subdivisions (b)(1) through (b)(6) of this section; provided the investment manager has assets under management of at least one hundred million dollars ($100,000,000).
(7)	With respect to Retirement Systems' assets referred to in subdivision (b)(8) of this section, (i) insurance contracts that provide for participation in individual or pooled separate accounts of insurance companies, (ii) group trusts, (iii) individual, common, or collective trust funds of banks and trust companies, (iv) real estate investment trusts, (v) investment companies registered under the Investment Company Act of 1940, and (vi) limited partnerships, limited liability companies, or other limited liability investment vehicles that are not publicly traded; provided the investment manager has assets under management of at least one hundred million dollars ($100,000,000); provided such investment assets are managed primarily for the purpose of investing in or owning real estate or related debt financing located within or outside the United States; and provided that the investments authorized by this subsection shall not exceed ten percent (10%) of the market value of all invested assets of the Retirement Systems, determined with respect to a particular investment under this subdivision at the time of such investment.
(8)	With respect to assets of the Teachers' and State Employees' Retirement System, the Consolidated Judicial Retirement System, the Firemen's and Rescue Workers' Pension Fund, the Local Governmental Employees' Retirement System, the Legislative Retirement System, the North Carolina National Guard Pension Fund (hereinafter referred to collectively as the Retirement Systems), and assets invested pursuant to subdivision (b2) of this section, they may be invested in equity securities traded on a public securities exchange or market organized and regulated pursuant to the laws of the jurisdiction of such exchange or market and issued by any company incorporated or otherwise created or located within or outside the United States and derivative securities described in this subdivision traded on such public securities exchange or market; provided the investments meet the conditions of this subdivision.
The investments authorized for the Retirement Systems under this subdivision cannot exceed sixty‑five percent (65%) of the market value of all invested assets of the Retirement Systems, determined with respect to a particular investment under this subdivision at the time of such investment.So long as each investment manager has assets under management of at least one hundred million dollars ($100,000,000), the assets authorized under this subdivision can be invested through (i) investment companies registered under the Investment Company Act of 1940, (ii) individual, common, or collective trust funds of banks,  and trust companies, (iii) group trusts, and (iv) contractual arrangements in which investment managers have full and complete discretion and authority to invest assets specified in such contractual arrangements. In addition, any such investment manager may be authorized by the State Treasurer to invest in derivative securities the value of which is derived from or linked to any one or more underlying securities or assets (or indices of securities or assets); provided that investments in derivative securities are primarily for the purpose of managing transaction or currency exchange risks in purchasing, selling, or holding equity securities authorized under this subdivision.
The assets authorized under this subdivision can also be invested directly, by the State Treasurer in any of the following:
a.	 Equity securities represented in any of the S&P, Russell, or MSCI Indices.b.	 Derivative securities the value of which is derived from or linked to the value of an underlying security described in the preceding sub‑subdivision; provided that such investments in derivative securities are primarily for the purpose of managing transaction or currency exchange risk in purchasing, selling, or holding equity securities authorized under this subdivision.
	
No more than one and one‑half percent (1 1/2%) of the market value of the Retirement Systems' assets that may be invested directly  under this subdivision can be invested in the stock of a single corporation, and the total number of shares in that single corporation cannot exceed eight percent (8%) of the issued and outstanding stock of that  corporation, each determined with respect to a particular investment under the subdivision at the time of such investment.
d.	To f. Repealed by Session Laws 2001‑444, s. 2, effective October 1, 2001.
g.	That investments may be made in securities convertible into common stocks issued by any such company, if such securities bear one of the four highest ratings of at least one nationally recognized rating service and do not bear a rating below the four highest by any nationally recognized rating service which may then rate the particular security.
(9)	With respect to Retirement Systems' assets, as defined in subdivision (b)(8) of this subsection, they may be invested in limited partnership interests in a partnership or in interests in a limited liability company if the primary purpose of the partnership or limited liability company is to invest in public or private debt, public or private equity, or corporate buyout transactions, within or outside the United States. The amount invested under this subdivision shall not exceed five percent (5%) of the market value of all invested assets of the Retirement Systems. (10)	Recodified as part of subdivision (b)(9) by Session Laws 2000‑160, s. 2.
(11)	With respect to assets of the Escheat Fund, obligations of the North Carolina Global TransPark Authority authorized by G.S. 63A‑4(a)(22), not to exceed twenty‑five million dollars ($25,000,000), that have a final maturity not later than October 1, 2009. The obligations shall bear interest at the rate set by the State Treasurer. No commitment to purchase obligations may be made pursuant to this subdivision after September 1, 1993, and no obligations may be purchased after September 1, 1994. In the event of a loss to the Escheat Fund by reason of an investment made pursuant to this subdivision, it is the intention of the General Assembly to hold the Escheat Fund harmless from the loss by appropriating to the Escheat Fund funds equivalent to the loss.
If any part of the property owned by the North Carolina Global TransPark Authority now or in the future is divested, proceeds of the divestment shall be used to fulfill any unmet obligations on an investment made pursuant to this subdivision.
(12)	With respect to assets of the Escheat Fund, in addition to those investments authorized by subdivisions (1) through (6) of this subsection, up to twenty percent (20%) in the investments authorized under subdivisions (7) through (9) of this subsection, notwithstanding the percentage limitations imposed on the Retirement Systems investments under those subdivisions.
(b1)	With respect to investments authorized by subdivisions (b)(8) and (b)(9) of this section, the State Treasurer shall appoint an Investment Advisory Committee, which shall consist of five members: the State Treasurer, who shall be chairman ex officio; two members selected from among the members of the boards of trustees of the Retirement Systems; and two members selected from the general public. The two public members must have experience in one or more of the following areas: investment management, real estate investment trusts, real estate development, venture capital investment, or absolute return strategies. The State Treasurer shall also appoint a Secretary of the Investment Advisory Committee who need not be a member of the committee. Members of the committee shall receive for their services the same per diem and allowances granted to members of the State boards and commissions generally. The committee shall have advisory powers only and membership shall not be deemed a public office within the meaning of Article VI, Section 9 of the Constitution of North Carolina or G.S. 128‑1.1.
(b2)	The State Treasurer may invest funds deposited pursuant to subdivision (a)(17f) of this section in any of the investments authorized under subdivisions (1) through (6) and subdivision (8) of subsection (b) of this section, notwithstanding the percentage limitations imposed on the Retirement Systems investments therein. The State Treasurer may require a minimum deposit, up to one hundred thousand dollars ($100,000), and may assess reasonable fees not to exceed 15 basis points per annum, as a condition of participation pursuant to this subsection. Funds deposited pursuant to this subsection by a hospital shall remain the funds of that hospital, and interest or other investment income earned thereon shall be prorated and credited to the contributing hospital on the basis of the amounts thereof contributed, figured according to sound accounting principles. Fees assessed by the State Treasurer may be used to defray the cost of administering invesments pursuant to this subdivision.
(b3)	The State Treasurer may invest funds deposited pursuant to subdivision (a)(16a) of this section in any of the investments authorized under subdivisions (1) through (6) and subdivision (8) of subsection (b) of this section, notwithstanding the percentage limitations imposed on the Retirement Systems investments therein. The State Treasurer may require a minimum deposit, up to one hundred thousand dollars ($100,000), and may assess reasonable fees, not to exceed 15 basis points per annum, as a condition of participation pursuant to this subsection. Funds deposited pursuant to this subsection by the University of North Carolina Hospitals at Chapel Hill shall remain the funds of the University of North Carolina Hospitals at Chapel Hill, and interest or other investment income earned thereon shall be prorated and credited to the University of North Carolina Hospitals at Chapel Hill on the basis of the amounts thereof contributed, figured according to sound accounting principles.
(b4)	In addition to the investments authorized under subdivisions(b)(1) through (b)(6) of this section, the State Treasurer may invest funds deposited in the Local Government Other Post‑Employment Benefits Fund in any of the investments authorized under subdivision (b)(8) of this section, notwithstanding the percentage limitations imposed on the Retirement Systems investments therein. For investments from that Fund made under subdivision (b)(8) of this section, the State Treasurer may require a minimum deposit of up to one hundred thousand dollars ($100,000) and may assess fees of up to 15 basis points per annum as a condition of making the investment. The fee may be used to defray the costs of administering the Fund.
(b5)	In addition to the investments authorized under subdivisions (b)(1) through (b)(6) of this section, the State Treasurer may invest funds deposited in the Local Government Law Enforcement Special Separation Allowance Fund in any of the investments authorized under subdivision (b)(8) of this section, notwithstanding the percentage limitations imposed on the Retirement Systems investments therein. For investments from that Fund made under subdivision (b)(8) of this section, the State Treasurer may require a minimum deposit of up to one hundred thousand dollars ($100,000) and may assess fees of up to 15 basis points per annum as a condition of making the investment. The fee may be used to defray the costs of administering the Fund."
SECTION 3.  This act is effective when it becomes law.