Prohibited Transaction Class Exemption for Certain Transactions Between Investment Companies and Employee Benefit Plans (PTE 1977-4)

PTE 77-4, which was originally granted on April 8, 1977, exempts from the prohibited transaction restrictions the purchase and sale by an employee benefit plan of shares from a registered, open-end investment company (mutual fund) when a fiduciary of the plan (e.g., an investment manager) is also the investment advisor for the investment company. There are three disclosure requirements incorporated within the class exemption. The first requirement is intended to put the plan on notice of possible fees associated with the redemption of open-end mutual fund shares. It requires disclosure of any redemption fees in the current prospectus of the open-end mutual fund (the prospectus in effect at the time of the plan’s acquisition or disposal of such shares). The class exemption permits a plan to pay a redemption fee on the sale, by redemption, of open-end mutual fund shares only if the fee is paid to the open-end mutual company and the above noted disclosure is made. The second requirement is that, at the time of the purchase or sale of such mutual fund shares, an independent fiduciary receive a copy of the current prospectus issued by the open-end mutual fund and full written disclosure of the investment advisory fees charged to or paid by the plan and the open-end mutual fund to the investment advisor. Pursuant to advisory opinion 2013-04A, the Department interprets the term “prospectus” in PTE 77-4 to include a “summary prospectus” if the summary prospectus meets the requirements of the Securities and Exchange Commission’s revised disclosure provisions for mutual funds including a summary prospectus rule that were published in 2009 Pursuant to the SEC’s revised disclosure provisions, mutual funds also are required to send the full prospectus to the investor upon an investor’s request, and to provide the full prospectus on-line at a specified internet site. The third requirement is that the independent fiduciary be notified of any changes in the fees and approves in writing the plan’s purchase or sale of affected mutual fund shares, or the plan’s continued possession of any such mutual fund shares that it had acquired before the fee changes.

The latest form for Prohibited Transaction Class Exemption for Certain Transactions Between Investment Companies and Employee Benefit Plans (PTE 1977-4) expires 2029-07-31 and is listed under ICR 202506-1210-001.

Summary Prospectus to Everyone Affected

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