177 - Eligible investments.

§  177.  Eligible  investments. In addition to the powers contained in  any  other  provision  of  law,  including   the   provisions   of   the  administrative  code of the city of New York, the trustee or trustees of  a fund shall have the power to invest the moneys  thereof  in:  1.  Such  securities in which the trustees of a savings bank may invest the moneys  deposited therein as provided by law, subject, however, to the following  limitations:    (a)  (i)  Except as provided in sections one hundred seventy-eight and  three hundred six of the public housing law,  no  conventional  mortgage  may  exceed  sixty  per  centum  of  the appraised value of improved and  unencumbered real property or seventy-five per centum of  the  appraised  value  thereof  if  such  real  property  is  improved  by a building or  buildings, the major portion of which is used,  or  in  the  case  of  a  building  under  construction  is to be used, for residential, business,  manufacturing  or  agricultural  purposes;  (ii)  the  aggregate  unpaid  principal  amount  of  all  conventional mortgages at any time held in a  fund shall not exceed thirty per centum of the assets of such fund;  and  (iii)  not  more than five per centum of the assets of any fund shall be  invested in any one conventional mortgage;    (b) the aggregate unpaid principal amount  of  obligations  issued  or  guaranteed  by the international bank for reconstruction and development  at any time held in a fund shall not  exceed  five  per  centum  of  the  assets of such fund;    (c)  the  aggregate  unpaid principal amount of all obligations of the  Dominion of Canada, of any province of the Dominion of  Canada,  and  of  any  city of the Dominion of Canada at any time held in a fund shall not  exceed five per centum of the assets of such fund;    (d)  the  aggregate  unpaid  principal  amount  of   equipment   trust  certificates at any time held in a fund shall not exceed five per centum  of the assets of such fund; and    (e)  not  more  than  two and one-half per centum of the assets of any  fund shall be invested  in  the  obligations  of  any  one  railroad  or  industrial  corporation,  or  any  one  corporation engaged directly and  primarily in the production, transportation, distribution,  or  sale  of  electricity or gas, or the operations of telephone and telegraph systems  or water works, or in some combination thereof; and    (f) not more than thirty per centum of the assets of any fund shall be  invested  in  bonds  of  electric  and  gas  corporations  as defined in  subdivision thirteen of section two hundred thirty-five of  the  banking  law,   notwithstanding   the   provisions   of  paragraph  (h)  of  such  subdivision.    1-a. Obligations payable in United States funds of the United  States,  any  state of the United States, District of Columbia or Commonwealth of  Puerto Rico, of any department, agency or political subdivision thereof,  or  of  any  corporation,  company  or  other  issuer  of  any  kind  or  description created or existing under the laws of the United States, any  state  of  the  United  States,  District of Columbia or Commonwealth of  Puerto Rico and obligations payable in United States funds of Canada  or  any province or city of Canada, provided    (a)  each  such  obligation  at  the time of investment shall be rated  investment grade by two nationally recognized rating services or by  one  nationally  recognized rating service in the event only one such service  rates such obligation; and    (b) the aggregate investment by a fund in the obligations of  any  one  issuer  pursuant  to this subdivision (other than the obligations of the  United States, or those for which the faith  of  the  United  States  is  pledged  to  provide  payment  of  the interest and principal) shall notexceed two per centum of the assets of such fund or five per  centum  of  the direct liabilities of such issuer.    2.  Equity  securities,  and  interest-bearing  obligations payable in  United States funds which are convertible into equity securities, of any  corporation created or existing under the laws of the United States, any  state of the United States, District of  Columbia  and  Commonwealth  of  Puerto  Rico,  or  any  investment  company, as defined by, and which is  registered under, an act of Congress of the United States, entitled  the  "Investment   Company  Act  of  1940",  approved  August  twenty-second,  nineteen  hundred  forty,  as  amended,   subject   to   the   following  limitations:    (a)  the  maximum  investment  by  a fund in such securities shall not  exceed (i) in any one year fifteen per centum  of  the  assets  of  such  fund,  or  (ii)  seventy per centum in the aggregate; provided, further,  however, that more than fifteen per centum of such assets, but not  more  than  twenty  per centum thereof, may be so invested in any one year but  only to the extent that the per centum  of  such  investments  over  all  prior  years  from  the effective date of this act when added to the per  centum of such investments during that year does not exceed  an  average  of  fifteen  per  centum of the assets of such fund over all prior years  and the year in which the investment is being made;    (b) not more than two per centum of the assets of any  fund  shall  be  invested  in the equity securities of any one corporation and subsidiary  or subsidiaries thereof;    (c) not more than five per centum of the total issued and  outstanding  equity securities of any one corporation shall be owned by any fund; and    (d)  notwithstanding any other provision of law, the equity securities  acquired hereunder must be registered on a national securities exchange,  as provided in an act of congress of the  United  States,  entitled  the  "Securities Exchange Act of 1934", approved June sixth, nineteen hundred  thirty-four,  as  amended,  or otherwise registered pursuant to said act  and, if such  equity  securities  are  so  otherwise  registered,  price  quotations for such equity securities are furnished through a nationwide  automated  quotations  system  approved  by  the National Association of  Securities Dealers, Inc.    3. Conventional mortgages guaranteed by a state bank or trust  company  having  a net worth in excess of five hundred million dollars, provided,  however, that not more than ten per centum of the  assets  of  any  fund  shall be invested in any such mortgage so guaranteed.    4. Bonds and notes of any bank, trust company, savings bank or savings  and loan association organized under the laws of this state having a net  worth  of  at  least ten million dollars, which bonds and notes shall be  validly secured at all times to the extent of one hundred  and  ten  per  centum  of  the  unpaid  principal  amount  of  such  bonds and notes by  mortgages upon real estate insured by the federal housing  administrator  or  any  of his successors in office and guaranteed by the United States  under the  provisions  of  the  national  housing  act,  as  amended  or  supplemented,  and  to  the  extent  of one hundred and thirty-three and  one-third per centum of the unpaid principal amount of  such  bonds  and  notes  by conventional mortgages, the valuation of which mortgages shall  be based upon the unpaid principal amount thereof upon the date  of  the  pledge,  assignment  or  transfer thereof to such fund or its trustee or  trustees as security for such bonds and notes, such bonds or notes to be  amortized in  substantially  equal  annual  or  semiannual  payments  of  principal and interest over a period not in excess of twenty-five years,  provided  the  aggregate  unpaid  principal  amount  of  bonds and notes  secured by conventional mortgages shall not exceed five  per  centum  of  the assets of such fund.5.  The  trustee  or  trustees  shall have the power to participate or  co-invest in any whole or part interest in any conventional mortgage  or  insured mortgage, or in any whole or part interest in any such mortgage,  which  mortgage  is  held  for the benefit of the holder or holders of a  whole  interest  or part interests therein, but no such investment shall  be made in any part interest which is junior or subordinate to any other  part interest therein nor if the aggregate amount of all investments  by  the  fund  in  whole  and  part  interests  in such mortgages when added  together  will  exceed  the  limitations  set  forth  in  the  foregoing  subdivisions   of   this  section  applicable  to  investments  in  such  mortgages.    6. Real estate only if acquired  or  used  for  one  or  more  of  the  following purposes and in the following manner:    (a)  The  land  and the building thereon in which it has its principal  office.    (b) Such as shall be requisite for its convenient accommodation in the  transaction of its business.    (c) Such as  shall  have  been  acquired  in  satisfaction  of  loans,  mortgages,  liens, judgments, decrees or other debts previously owing to  such fund in the course of its business.    (d)  Such  as  shall  have  been  acquired  in  part  payment  of  the  consideration  on  the  sale  of real property owned by it, if each such  transaction shall have effected a net reduction in the fund's investment  in real property.    (e) Such real property, other than property to be used  primarily  for  agricultural,  horticultural,  ranch, mining, recreational, amusement or  club purposes, as may be acquired, as an investment for  the  production  of  income,  or  as may be acquired to be improved or developed for such  investment purpose pursuant to an existing program therefor, subject  to  the  following limitations: (1) the cost of each parcel of real property  so acquired under the  authority  of  this  subdivision,  including  the  estimated  cost  to  the fund of the improvement or development thereof,  when added to the value of all other  real  property  then  held  by  it  pursuant  to  this  subdivision,  shall  not exceed five per cent of its  assets, and (2) the cost of each parcel of real property acquired  under  the  authority  of this subdivision, including the estimated cost to the  fund of the improvement or development thereof, shall not exceed two per  cent of the fund's assets.    7. The trustees of a fund shall have the power to  invest  the  moneys  thereof  in  limited partnerships, joint ventures, stock of corporations  (including subsidiaries of the fund), group trusts, common trust  funds,  collective  investment funds, investment companies (as defined by an act  of Congress entitled the "Investment Company  Act  of  1940"),  separate  accounts  established by a domestic life insurance company in accordance  with section forty-two hundred forty  of  the  insurance  law,  separate  accounts  of  the kinds authorized for domestic life insurance companies  in accordance with section forty-two hundred forty of the insurance  law  established  by  life  insurance companies doing business in this state,  real estate investment trusts (as defined in section 856 of the Internal  Revenue Code of 1986) or any other similar  investment  entity,  whether  owned  in  whole  or in part by the fund, provided that (a) such limited  partnership, joint venture, corporation (including a subsidiary  of  the  fund),  group  trust,  common  trust  fund, investment company, separate  account, collective investment entity, real estate investment  trust  or  other  similar  investment  entity  has  been  established  or organized  primarily for the purpose of investing in  securities,  real  estate  or  other  investments  in  which  the  trustee  or  trustees  of a fund are  authorized to invest pursuant to this section; and (b)  each  investmentby  a  fund  pursuant  to  this  subdivision  shall  be deemed to be the  investment of the fund in such investment entity  (rather  than  in  the  assets of such investment entity), except that in calculating the amount  of  the  fund's  investment  in  assets  for  purposes of the percentage  limitations, if any set forth in this section, there shall  be  included  all  assets  held  by any such investment entity in which the fund shall  have an investment as of the date of  determination,  but  only  to  the  extent of the fund's indirect interest in such assets resulting from its  investment in such investment entity.    8.  The  trustees  of a fund shall have the power to invest the moneys  thereof in foreign equity securities provided that (a) any  such  equity  security is registered on a national securities exchange, as provided in  an  act  of  congress  of  the  United  States, entitled the "Securities  Exchange  Act  of  1934",  approved   June   sixth,   nineteen   hundred  thirty-four,  as  amended,  or otherwise registered pursuant to said act  and,  if  such  equity  security  is  so  otherwise  registered,   price  quotations   therefor  are  furnished  through  a  nationwide  automated  quotation system approved by  the  National  Association  of  Securities  Dealers,  Inc.  or  is  registered  on  a foreign exchange organized and  regulated pursuant to the laws of the jurisdiction of such exchange  and  (b)  the corporation has averaged at least one billion dollars in annual  sales for the three consecutive years preceding the year  in  which  the  investment  is made or has market capitalization of at least one billion  dollars at the time the investment is made. Investments in such  foreign  equities  shall  be included together with a fund's investments in other  equity securities for purposes of the percentage limitations  set  forth  in the foregoing subdivisions of this section, and not more than ten per  centum  of  the assets of any fund shall be invested in the aggregate in  such foreign equities.    9. Investments, which do not qualify or are not  permitted  under  any  other  subdivision  of this section, notwithstanding any other provision  of law, provided    (a) the investments by a fund made pursuant to this subdivision  shall  not  at  any  time  exceed  twenty-five per centum of the assets of such  fund;    (b) such investments  shall  be  for  the  exclusive  benefit  of  the  participants  and  beneficiaries,  and the trustee or trustees of a fund  shall make such investments with the care, skill, prudence and diligence  under the circumstances then prevailing that a prudent person acting  in  a  like capacity and familiar with such matters would use in the conduct  of an enterprise of a like character and with like aims; and    (c) such investments shall, to the extent reasonably possible, benefit  the overall economic health of the state of New York, so long  and  only  if such investments satisfy paragraph (b) of this subdivision.    10.  In  calculating  assets of a fund and percentages thereof for the  purposes of this section, a fund is authorized to use a market valuation  methodology, provided the valuation methodology is used consistently for  all such calculations and is in accordance  with  recognized  accounting  methodology.