Collective Investment Funds Conversion Transactions, Prohibited Transaction Class Exemption 1997-41

Prohibited Transaction Exemption (PTE) 97-41 permits an employee benefit plan to purchase shares of a registered open-end investment company (mutual fund) in exchange for plan assets transferred in-kind from a collective investment fund (CIF) maintained by a bank or plan adviser, even though the bank or plan adviser, or an affiliate thereof, is the investment adviser for the mutual fund and also serves as a fiduciary for the plan, provided that the purchase and transfer is in connection with a complete withdrawal of the plan's investment in the CIF and certain other conditions are met. Among other conditions, the exemption requires the bank or plan adviser to provide an independent fiduciary of the plan with advance written notice of the proposed transfer and full written disclosure of information concerning the mutual fund, including the current prospectus; disclosure of the fees to be charged to, or paid by the plan and funds to the bank or plan adviser, including the nature and extent of any differential between the rates of the fees; the reasons why the bank or plan adviser considers the in-kind transfers appropriate for the plan; and a statement of whether there are any limitations applicable to the bank or plan adviser with respect to which plan assets may be invested in shares of the mutual fund and, if so, the nature of such limitations; and the identity of securities that will have to be valued for the transfer. The independent fiduciary must give prior written approval of the transfer (and written approval of any electronic transmission of subsequent confirmations from the bank or plan adviser, if the independent fiduciary elects to receive such statements in that form); and the bank or adviser must send written (or electronic, if approved) confirmation of the transfer. Subsequent to a transfer, the bank or plan adviser must provide the independent fiduciary of the plan with updated prospectuses at least annually for mutual funds in which the plan remains invested; the bank or plan adviser must also provide, upon the independent fiduciary's request, a report or statement of all fees paid by the mutual fund to the bank or plan adviser, which may be in the form of the most recent financial report.

The latest form for Collective Investment Funds Conversion Transactions, Prohibited Transaction Class Exemption 1997-41 expires 2028-05-31 and can be found here.