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March 26, 1970
Honorable Duane Berentson
State Representative, 40th District
1490 Country Club Drive
Burlington, Washington 98233
Cite as: AGLO 1970 No. 47
This is written in response to your recent request for our opinion on a question pertaining to the investment of certain retirement funds in the shares of open end investment companies (i.e., mutual funds). We paraphrase your question as follows:
Must the Washington public employees' retirement board or the board of trustees of the Washington state teachers' retirement system obtain advice in writing from an investment counsel as a condition precedent to investing retirement funds under its jurisdiction in open end investment company (mutual fund) shares?
The Washington public employees' retirement board and the board of trustees of the Washington state teachers' retirement system are both currently governed by identically worded statutes with respect to the investment of their funds in equities. See, subsections (18) and (19) of RCW 41.40.071 and 41.32.200, respectively. Under both of these statutes, the subject of mutual funds is covered by subsection (18) and the subject of general investments in common stock is covered by subsection (19).
The critical point to be noted and understood, within the context of your inquiry, is that the receipt of written advice from an investment counsel is spelled out as a condition precedent only as to those investments of retirement funds which are governed by the provisions of subsections (19) of these two statutes. Under the respective subsections (18), which authorize the investment of the subject retirement funds in the shares of certain open end investment companies, no such requirement exists.1/
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Accordingly, we answer your question, as paraphrased, in the negative.
We trust that the foregoing will be of assistance to you.
Very truly yours,
FOR THE ATTORNEY GENERAL
Philip H. Austin
Assistant Attorney General
*** FOOTNOTES ***
1/For ease of reference, we are enclosing herewith a xerox copy of RCW 41.40.071 in its entirety. RCW 41.32.200, relating to the investment of funds of the teachers' retirement system, is identical in all material respects to this statute. The point we are making will be readily discernible upon an examination of the text of subsections (18) and (19) of the statute enclosed.