Investment; prohibited interests, payments and actions; modification of terms of subsequent prepaid tuition contracts to ensure actuarial soundness.

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1. The Board shall create a comprehensive plan that specifies the policies for investment which the State Treasurer shall follow in administrating the Trust Fund.

2. The Board may authorize the State Treasurer to invest the property of the Trust Fund in:

(a) A bond, note, certificate or other general obligation of the State of Nevada, or of a county, city, general improvement district or school district of the State of Nevada.

(b) A corporate bond of a corporation created by or existing under the laws of the United States or of a state, district or territory of the United States with a rating not lower than "A" or its equivalent by a nationally recognized rating service. The total amount invested in such bonds must not exceed 50 percent of the book value of the total fixed income investments of the Trust Fund.

(c) Commercial paper of a corporation created by or existing under the laws of the United States or of a state, district or territory of the United States or of a wholly owned subsidiary of such a corporation with a rating not lower than "A-3" or "P-3" by a nationally recognized rating service.

(d) A bond, note, debenture or other valid obligation that is issued by the Treasury of the United States.

(e) A bond, note, debenture or other security that is issued by an agency or instrumentality of the United States or that is fully guaranteed by the United States in:

(1) The Federal Farm Credit Banks Funding Corporation;

(2) The Federal National Mortgage Association;

(3) The Federal Home Loan Banks;

(4) The Federal Home Loan Mortgage Corporation; or

(5) The Government National Mortgage Association.

(f) A bond, note, debenture or other security in the Student Loan Marketing Association, regardless of whether it is guaranteed by the United States.

(g) A bond, note or other obligation issued or unconditionally guaranteed by the International Bank for Reconstruction and Development, the International Finance Corporation or the Inter-American Development Bank that:

(1) Is denominated in United States dollars;

(2) Is a senior unsecured unsubordinated obligation;

(3) At the time of purchase has a remaining term to maturity of 5 years or less; and

(4) Is rated by a nationally recognized rating service as "AA" or its equivalent, or better,

except that investments pursuant to this paragraph may not, in aggregate value, exceed 15 percent of the total par value of the Trust Fund at the time of purchase.

(h) A bond, note or other obligation publicly issued in the United States by a foreign financial institution, corporation or government that:

(1) Is denominated in United States dollars;

(2) Is a senior unsecured unsubordinated obligation;

(3) Is registered with the Securities and Exchange Commission in accordance with the provisions of the Securities Act of 1933, 15 U.S.C. §§ 77a et seq., as amended;

(4) Is publicly traded;

(5) Is purchased from a registered broker-dealer;

(6) At the time of purchase has a remaining term to maturity of 5 years or less; and

(7) Is rated by a nationally recognized rating service as "AA" or its equivalent, or better,

except that investments pursuant to this paragraph may not, in aggregate value, exceed 10 percent of the total par value of the Trust Fund as determined at the time of purchase.

(i) Collateralized mortgage obligations that are rated "AAA" or its equivalent by a nationally recognized rating service.

(j) Asset-backed securities that are rated "AAA" or its equivalent by a nationally recognized rating service.

(k) Money market mutual funds that:

(1) Are registered with the Securities and Exchange Commission;

(2) Are rated by a nationally recognized rating service as "A" or its equivalent, or better; and

(3) Invest only in securities issued by the Federal Government or agencies of the Federal Government or in repurchase agreements fully collateralized by such securities.

The total dollar amount invested in such mutual funds must not exceed 20 percent of the total dollar amount of the Trust Fund that is invested.

(l) Common or preferred stock of a corporation created by or existing under the laws of the United States or of a state, district or territory of the United States, if:

(1) The stock of the corporation is:

(I) Listed on a national stock exchange; or

(II) Traded in the over-the-counter market, if the price quotations for the over-the-counter stock are quoted by the National Association of Securities Dealers Automated Quotation System, NASDAQ;

(2) The outstanding shares of the corporation have a total market value of not less than $50,000,000;

(3) The maximum investment in stock is not greater than 60 percent of the book value of the total investments of the Trust Fund;

(4) Except for investments made pursuant to paragraph (o), the amount of an investment in a single corporation is not greater than 3 percent of the book value of the assets of the Trust Fund; and

(5) Except for investments made pursuant to paragraph (o), the total amount of shares owned by the Trust Fund is not greater than 5 percent of the outstanding stock of a single corporation.

(m) A covered call or put option on securities that are traded on one or more of the regulated exchanges in the United States.

(n) A pooled or commingled real estate fund or a real estate security that is managed by a corporate trustee or by an investment advisory firm that is registered with the Securities and Exchange Commission, either of which may be retained by the Board as an investment manager. The shares and the pooled or commingled fund must be held in trust. The total book value of an investment made under this paragraph must not at any time be greater than 5 percent of the total book value of all investments of the Trust Fund.

(o) Mutual funds or common trust funds that consist of any combination of the investments listed in paragraphs (a) to (n), inclusive.

3. The State Treasurer shall exercise the standard of care in investing the property of the Trust Fund that a person of prudence, discretion and intelligence would exercise in the management of his or her own affairs, given the prevailing circumstances, not in regard to speculation but rather to the permanent disposition of the property, considering the potential income from and the probable safety of his or her capital.

4. Subject to the terms, conditions, limitations and restrictions set forth in this section, the State Treasurer may sell, assign, transfer or dispose of the property and investments of the Trust Fund upon the approval of a majority of the Board.

5. The assets of the Trust Fund:

(a) Must be maintained, invested and expended solely for the purposes of NRS 353B.010 to 353B.190, inclusive; and

(b) Must not be loaned, transferred or otherwise used for a purpose other than the purposes of NRS 353B.010 to 353B.190, inclusive.

6. The State Treasurer shall credit any income derived from an investment or a gain from a sale or exchange of an investment to the Trust Fund.

7. The State Treasurer shall acquire each investment for the Trust Fund at a price not to exceed the prevailing market value for such an investment.

8. Each investment in the Trust Fund must be clearly marked to indicate ownership by the Trust Fund.

9. The State Treasurer, an employee of the State Treasurer, or a member or employee of the Board shall not:

(a) Have a direct or indirect interest in the income, gain or profit of an investment that the State Treasurer makes;

(b) Receive pay or emolument for his or her services in connection with an investment that the State Treasurer makes; or

(c) Become an endorser, surety or obligor for money that is borrowed from the Trust Fund.

10. If the annual actuarial study performed pursuant to NRS 353B.190 reveals that there is insufficient money to ensure the actuarial soundness of the Trust Fund, the Board shall modify the terms of subsequent prepaid tuition contracts.

11. The terms, conditions, limitations and restrictions regarding investments of the Trust Fund listed in this section apply only at the time an investment is originally acquired and must not be construed to require the liquidation of an investment at any time.

(Added to NRS by 1997, 3486; A 1999, 796; 2001, 2163, 2166; 2019, 652)


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