(760 ILCS 45/3) (from Ch. 17, par. 2103)
Sec. 3. Establishment of common trust fund. Any bank or trust company
may, at and during such time as it is qualified to act as a fiduciary in
this State, establish, maintain, and administer one or more common trust
funds for the purpose of furnishing investments to itself as a fiduciary,
or to itself and another or others as co-fiduciaries. An investment in a
common trust fund does not constitute an investment in the various
securities composing the common trust fund, but is an investment in the
fund as an entity. A bank or trust company, in its capacity as a fiduciary
or co-fiduciary, whether that fiduciary capacity arose before or is created
after this Act takes effect, may invest funds that it holds for investment
in that capacity in interests in one or more common trust funds, subject to
the following limitations:
(1) In the case of a fiduciary other than an |
| administrator, the investment may be made in a common trust fund if such an investment is not expressly prohibited by the instrument, judgment, or order creating the fiduciary relationship, or by an amendment thereof, and if, under the instrument, judgment, or order creating the fiduciary relationship, or an amendment thereof, the funds so held for investment might properly be invested in an investment with the overall investment characteristics of the common trust fund, considered as an entity, and if, in the case of co-fiduciaries, the bank or trust company procures the consent of its co-fiduciary or co-fiduciaries to the investment in those interests. If the instrument creating the fiduciary relationship gives to the bank or trust company the exclusive right to select investments, the consent of the co-fiduciary shall not be required. Any person acting as co-fiduciary with any such bank or trust company is hereby authorized to consent to the investment in those interests.
|
|
(2) In the case of an administrator, the investment
|
| may be made upon approval by the court.
|
|
(3) A bank or trust company in establishing,
|
| maintaining and administering one or more common trust funds for the purpose of furnishing investments to itself as fiduciary shall have a duty to invest and manage such common trust fund assets as follows:
|
|
(A) The bank or trust company has a duty to
|
| invest and manage common trust fund assets as a prudent investor would considering the purposes, terms, distribution requirements, and other circumstances of the common trust fund. This standard requires the exercise of reasonable care, skill, and caution and is to be applied to investments not in isolation, but in the context of the common trust fund portfolio as a whole and as a part of an overall investment strategy that should incorporate risk and return objectives reasonably suitable to the common trust fund.
|
|
(B) No specific investment or course of action
|
| is, taken alone, prudent or imprudent. The bank or trust company may invest in every kind of property and type of investment, subject to this Section. The bank or trust company's investment decisions and actions are to be judged in terms of the bank or trust company's reasonable business judgment regarding the anticipated effect on the common trust fund portfolio as a whole under the facts and circumstances prevailing at the time of the decision or action. The standard set forth in this paragraph (3) is a test of conduct and not of resulting performance.
|
|
(C) The circumstances that the bank or trust
|
| company may consider in making investment decisions include, without limitation, the general economic conditions, the possible effect of inflation, the role each investment or course of action plays within the overall portfolio, and the expected total return.
|
|
(D) The bank or trust company may invest and
|
| reinvest common trust fund assets in interests in any open-end or closed-end management type investment company or investment trust (hereafter referred to as a "mutual fund") registered under the Investment Company Act of 1940 or may retain, sell, or exchange those interests, provided that the portfolio of the mutual fund, as an entity, is appropriate under the provisions of this Act. The bank or trust company is not prohibited from investing, reinvesting, retaining, or exchanging as common fund assets any interests in any mutual fund for which the bank or trust company or an affiliate acts as advisor or manager solely on the basis that the bank or trust company (or its affiliate) provides services to the mutual fund and receives reasonable remuneration for those services. A bank or trust company or its affiliate is not required to reduce or waive its compensation for services provided in connection with the administration, investment, and management of the common trust fund or a participant in the common trust fund because the bank or trust company invests, reinvests, or retains common trust fund assets in a mutual fund, if the total compensation paid by a participant to the bank or trust company and its affiliates, directly or indirectly, including any common trust fund fees, mutual fund fees, advisory fees, and management fees, is reasonable. However, a bank or trust company may receive fees equal to the amount of those fees that would be paid to any other party under Securities and Exchange Commission Rule 12b-1.
|
|
(4) A bank or trust company may not delegate the
|
| investment functions of a common trust fund established or operating under Section 584 of the Internal Revenue Code pursuant to Section 807 of the Illinois Trust Code except as authorized by the Bureau of the Comptroller of the Currency of the U. S. Department of the Treasury. A bank or trust company may hire one or more agents to give the trustee advice with respect to investments of a common trust fund and pay reasonable and appropriate compensation to the agent provided that the final investment decisions and the exclusive management of the common trust fund remain with the bank or trust company.
|
|
(5) On or after the effective date of this amendatory
|
| Act of 1991, this Section applies to all existing and future common trust funds, but only as to actions or inactions occurring after that effective date.
|
|
(Source: P.A. 101-48, eff. 1-1-20.)
|
(760 ILCS 45/4) (from Ch. 17, par. 2105)
Sec. 4.
Written plan.) Each common trust fund shall be established, administered
and maintained in accordance with a written declaration of trust, herein
referred to as the "plan", prepared by the bank or trust company and approved
by resolution of its board of directors. The plan shall make provision,
not inconsistent with this Act, as to the following matters: (1) the manner
in which the fund is to be operated, (2) the investment powers of the bank
or trust company with respect to the fund, including the character and kind
of investments which may be purchased for the fund, (3) the allocation and
apportionment of income, profits and losses, (4) the terms and conditions
governing the admission or withdrawal of investments or participations in
the fund, (5) the auditing and settlement of accounts of the bank or trust
company with respect to the fund, (6) the basis and method of valuing assets
in the fund, (7) the basis upon which the fund may be terminated, and (8)
such other matters as may be necessary or proper to define clearly the rights
of participants in the common trust fund. The plan may provide that if a
bond or other obligation for the payment of money is acquired as an investment
for any common trust fund at a cost in excess of the par or maturity value
thereof, such excess cost need not be amortized out of income within the
common trust fund itself; if the plan, however, should provide for the amortization
of such excess cost out of the income of such obligation, then such amortization
shall be made during but not beyond the period that such obligation is held
as an investment in such fund by deducting from each receipt of income and
adding to principal an amount equal to the sum obtained by dividing such
excess cost by the number of periodic payments of income to accrue on such
obligation from the date of such acquisition until its maturity date. The
plan may provide that Series G United States Savings Bonds, or any other
United States Bonds of any kind or series which are purchasable at a price
equivalent to the maturity value thereof and which provide for a decline
in redemption value at any time or times between purchase and maturity,
(a) may be purchased at any time for the common trust fund, (b) may be
transferred from a participating trust to the common trust fund at par
or maturity value in lieu of a contribution of money, and (c) shall at
all times and for all purposes of the common trust fund be valued at par
or maturity value. The provisions of the plan shall control all
participations in the fund and the rights and benefits of all persons
interested in such participations, as beneficiaries or otherwise. The
plan may be amended from time to time pursuant to resolution of the
board of directors of the bank or trust company. A copy of the plan
shall be available at the principal office of the bank or trust company
and any affiliate thereof during all regular business hours, for inspection
by any person having
an interest in a trust, any funds of which are invested in a
participation in the common trust fund, and upon reasonable request a
copy of the plan shall be furnished to such person.
(Source: P.A. 80-772.)
|
(760 ILCS 45/5) (from Ch. 17, par. 2106)
Sec. 5.
Management of the common trust funds.
Title to all assets of the
common trust fund shall, at all times, be vested in the bank or trust company,
as trustee of the common trust fund, and such assets shall be deemed to
be held by the bank or trust company, as such trustee. The bank or trust
company may, however, hold any of the assets of a common trust fund in the
name of a nominee, provided the records of such common trust fund clearly
show the ownership of the asset to be in the bank or trust company, as trustee
of the common trust fund, and the facts regarding its holding. The bank
or trust company shall have the exclusive management and control of each
common trust fund administered by it, and the sole right at any time to
sell, convert, reinvest, exchange, transfer or otherwise change or dispose
of the assets comprising the fund. The bank or trust company shall, at least
once each year, cause an audit of each common trust fund administered by
it to be made by a certified public accountant or a public accountant registered
in the State of Illinois. A copy of each
such audit shall be available at the principal office of the bank or
trust company and any affiliate thereof during all regular business hours,
for inspection by any
person having an interest in a trust, any funds of which are invested in
a participation in such common trust fund, and upon reasonable request a
copy of any such audit shall be furnished to such person. The reasonable
expense of any such audit made by an independent certified public
accountant or by an independent public accountant registered in the
State of Illinois may be charged to the principal or income of the
common trust fund, or partly to each, as the bank or trust company may
determine. The bank or trust company may charge a fee for the management
of any common trust fund administered by it, and such fee may be charged
in whole or in part against the common trust fund, provided that the
fractional part of such fee proportionate to the interest of each
participant shall not, when added to any other compensations charged by
the bank or trust company or any affiliate thereof to the participant, exceed
the total amount of
compensations which would have been charged to said participant if no
assets of said participant had been invested in participations in the
fund. If, however, the common trust is invested in a mutual fund for which
the bank or trust company or an affiliate provides services and receives
compensation, then the total compensation paid by a participant to the bank or
trust company and its affiliates, directly or indirectly, including any common
trust fund fees, mutual fees, advisory fees, and management fees, must be
reasonable. The bank or trust company may reimburse itself out of the common
trust fund for such reasonable expense incurred by it in the
administration of such fund as would have been chargeable to the
respective participating fiduciary accounts, if incurred in the separate
administration of those accounts.
(Source: P.A. 89-344, eff. 8-17-95.)
|