It is enacted by the General Assembly as follows:

SECTION 1. Section 35-10-11 of the General Laws in Chapter 35-10 entitled "State Investment Commission" is hereby amended to read as follows:

{ADD 35-10-11. Additional investment powers. -- ADD} The state, any state agency, any city or town, and any municipal agency which has, or has control of, any funds not immediately required for other purposes, may, in addition to other investments in which it may be authorized to invest by law, and notwithstanding any provisions of any special law or municipal charter to the contrary, invest the same either individually or with each other in:

(a) Deposits in banks, savings banks, national banks or trust companies, loan and investment companies, credit unions, and in shares of building-loan associations, the principal office of which institution or institutions is located in this state or which has a deposit taking facility within this state; provided, that the investments shall be made as would be done by prudent persons of discretion and intelligence in these matters who are seeking a reasonable income and preservation of their capital;

(b) In the shares or units of beneficial interest of any open end investment company or association or investment trust which is registered under the federal Investment Company Act of 1940 [15 U.S.C. sections 80a-1 et seq.], as heretofore or hereafter amended; provided that the company, association, or trust shall:

(1) Limit the issuance, distribution, and ownership of its shares or units solely to this state, state agencies, cities and towns of this state, and municipal agencies thereof, other than shares or units issued in connection with the initial capital required by the federal investment Company Act of 1940 [15 U.S.C. sections 80a-1 et seq.], as heretofore or hereafter amended;

(2) Invest solely in securities and investments which are lawful for investments of savings deposits as set forth and defined in sections 19-9-2, 19-9-3, 19-9-5(c), 19-9-5(d) and 19-9-6, without regard to the provisions of these sections as to percentage of deposits which may be so invested, or are lawful for investment of reserve funds by cities and towns under section 45-11-1, but subject to the restrictions that:

(i) No investment shall be made in any security or investment authorized under any of sections 19-9-2(e), 19-9-2(f), 19-9-2(g), 19-9-2(h) and 19-9-2(i), unless, after giving effect to the investment, no more than ten percent (10%) of the total assets of the company, association, or trust shall be invested in securities or investments of a class or type authorized solely under these sections and

(ii) No investment shall be made in any security or investment authorized under any of sections 19-9-3, 19-9-5(c), 19-9-5(d) and 19-9-6 unless, after giving effect to the investments, no more than five percent (5%) of the total assets shall be invested in the securities or investments authorized solely under these sections of any one issuer or obligor; and

(iii) If the lawful investments constitute collateral for any repurchase agreement, the company, association, or trust shall take delivery of the collateral either directly or through an authorized custodian; and

(3) Invest solely in such of the investments as would be done by prudent persons of discretion and intelligence in these matters who are seeking a reasonable income and preservation of their capital; and

(c) Notwithstanding the provisions of sections 35-10-11(b)(1); 35-10-11(b)(2)(i), and 35-10-11(b)(2)(ii), (i) in obligations {DEL of or guaranteed by the United States DEL} {ADD issued or guaranteed by the United States government or any agency or instrumentality thereof ADD} and repurchase agreements fully collateralized thereby or in securities of any open end investment company or association or investment trust, custodial arrangements, or pool which is registered under or exempt from the federal Investment Company Act of 1940 [15 U.S.C. sections 80a-1 et seq.], as heretofore or hereafter amended, provided that the portfolio of the company, association, trust, custodial arrangement, or pool is limited to {DEL United States DEL} obligations {ADD issued or guaranteed by the United States government or any agency or instrumentality thereof ADD} and repurchase agreements fully collateralized thereby and that the company, association, trust, custodial arrangement or pool takes delivery of the collateral either directly or through an authorized custodian, agent, or depository and (ii) in any security of a state or political subdivision thereof or in securities of any open end investment company or association or investment trust, custodial arrangement or pool which is registered under or exempt from the federal Investment Company Act of 1940 [15 U.S.C. 80a-1 et seq.], as heretofore or hereafter amended, provided (A) that the portfolio of the company, association, trust, custodial arrangement or pool is limited to state or political subdivision securities and repurchase agreements fully collateralized thereby, (B) that the company, association, trust, custodial arrangement or pool takes delivery of the collateral either directly or through an authorized custodian, or depository, (C) that the interest on the securities is exempt from federal income taxation, (D) that, at the time of the investment, the security (in the case of a security issued by or on behalf of a state or political subdivision thereof) has a rating as determined by a national rating agency of municipal obligations equal or superior to the last rating by the agency applicable to general obligations of the state of Rhode Island or (in the case of a fund) the fund invests solely in securities having such ratings, and (E) that, in connection with the investments, the state, state agency, city, town, or municipal agency may enter into contracts to purchase and resell the investments at specified or determinable prices.

SECTION 2. This act shall take effect upon passage.