N.Y. Retirement & Social Security Law § 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 waterworks, 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 not

exceed 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 semi-annual 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 (including capital appreciation), 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 ten 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.

(f) Notwithstanding any other provision of this article, for the

purposes of this subdivision, an investment in an entity that invests or

proposes to invest, directly or indirectly through one or more other

entities, at least a majority of its assets in (1) any interest in real

property of any kind or character as an investment for the production of

income (including capital appreciation), or (2) debt instruments secured

by any interest in real estate may be considered an investment in real

estate pursuant to this subdivision and included in the assets subject

to the ten percent limitation of paragraph (e) of this subdivision.

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 investment

by 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 thirty-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.