Section 177-D. Security loan agreements

1. A fund may enter into security
  loan agreements with broker-dealers and with New York state or  national
  banks  for  the  purpose  of prudently supplementing the income normally
  received from investments.
    2. The trustees of the funds involved shall monitor the  market  value
  of  the  loaned  marketable  securities  daily.  In  no  event shall the
  trustees allow the value of collateral posted to fall below  the  market
  value of the loaned marketable securities.
    3.  The term "security loan agreement", as used in this section, shall
  mean a written contract whereby a  fund  (the  lender)  agrees  to  lend
  marketable  securities  for  a  period  not to exceed one year, subject,
  however, to the following limitations:
    (a) The lender must retain the right to collect from the borrower  all
  dividends,  interest,  premiums,  rights, and any other distributions to
  which the lender would otherwise have been entitled,
    (b) The lender may waive the right to vote the securities  during  the
  term of the loan,
    (c)  The  lender  must retain the right to terminate the contract upon
  not more than five business days' notice.
    (d) The borrower shall provide collateral to the lender in the form of
  cash, bonds, or performance letters of  credit  drawn  on  a  bank  with
  capital, surplus and undivided earnings in excess of one hundred million
  dollars,  or  other interest-bearing notes and obligations of the United
  States or federal instrumentalities eligible for investment by a fund,
    (e)  The  security  loan  agreement  shall  provide  for  payment   of
  additional  collateral on a daily basis, or at such time as the value of
  the loaned marketable securities increases to agreed upon ratios.
    4. The term "marketable securities", as used in  this  section,  shall
  mean  securities  that  are  freely  traded  on  recognized exchanges or
  marketplaces.