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6 This act modifies the Public Funds and Accounts title by eliminating the Investment
7 Advisory Committee.
8 This act affects sections of Utah Code Annotated 1953 as follows:
10 51-7-12.5, as last amended by Chapter 375, Laws of Utah 1997
11 Be it enacted by the Legislature of the state of Utah:
12 Section 1. Section 51-7-12.5 is amended to read:
13 51-7-12.5. Deposit or investment of the Employers' Reinsurance Fund and
14 Uninsured Employers' Fund -- Authorized deposits and investments -- Asset manager.
15 (1) The principal of the Employers' Reinsurance Fund created in Section 34A-2-702 , and
16 the Uninsured Employers' Fund created in Section 34A-2-704 shall be deposited or invested only
17 in the following:
18 (a) any deposit or investment authorized by Section 51-7-11 ;
19 (b) equity securities, including common and preferred stock issued by corporations listed
20 on a major securities exchange, in accordance with the following criteria applied at the time of
22 (i) the treasurer may not invest more than 5%, determined on a cost basis, of the total fund
23 assets in the securities of any one issuer;
24 (ii) the treasurer may not invest more than 25%, determined on a cost basis, of total fund
25 assets in a particular industry;
26 (iii) the treasurer may not invest more than 5%, determined on a cost basis, of the total
27 fund assets in securities of corporations that have been in continuous operation for less than three
29 (iv) the fund may not hold in excess of 5% of the outstanding voting securities of any one
30 corporation; and
31 (v) at least 75% of the corporations in which investments are made under Subsection (1)(b)
32 must appear on the Standard and Poor's 500 Composite Stock Price Index;
33 (c) fixed-income securities, including bonds, notes, mortgage securities, zero coupon
34 securities and convertible securities issued by domestic corporations rated "A" or higher by
35 Moody's Investors Service, Inc. or by Standard and Poor's Corporation in accordance with the
36 following criteria applied at the time of investment:
37 (i) the treasurer may not invest more than 5%, determined on a cost basis, of the total fund
38 assets in the securities of any one issuer;
39 (ii) the treasurer may not invest more than 25%, determined on a cost basis, of the total
40 fund assets in a particular industry;
41 (iii) the treasurer may not invest more than 5%, determined on a cost basis, of the total
42 fund assets in securities of corporations that have been in continuous operation for less than three
43 years; and
44 (iv) the dollar-weighted average maturity of fixed-income securities acquired under
45 Subsection (1)(c) may not exceed ten years;
46 (d) fixed-income securities issued by agencies of the United States and
47 government-sponsored organizations, including mortgage-backed pass-through certificates and
48 mortgage-backed bonds;
49 (e) shares of an open-end diversified management investment company established under
50 the Investment Companies Act of 1940; or
51 (f) shares of or deposits in a pooled-investment program.
52 (2) (a) No more than 65% of the total fund assets of any of these funds, on a cost basis,
53 may be invested in common or preferred stocks at any one time.
54 (b) At least 35% of the total assets of these funds shall be invested in fixed-income
55 securities authorized by Section 51-7-11 and Subsections (1)(c) and (d).
56 (3) The state treasurer shall use appropriate investment strategies to protect the principal
57 of the funds administered under this section during periods of financial market volatility.
58 (4) (a) The state treasurer may employ professional asset managers to assist in the
59 investment of assets of the funds.
60 (b) The treasurer may provide compensation to asset managers from earnings generated
61 by the funds' investments.
Legislative Review Note
as of 10-24-01 12:09 PM
A limited legal review of this legislation raises no obvious constitutional or statutory concerns.
Office of Legislative Research and General Counsel
The Government Operations Interim Committee recommended this bill.
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