Advocates of legislation permitting tax-free conversion of common trust funds into mutual funds were heartened when the Senate approved the measure last week. But they stopped short of declaring victory.

"The champagne isn't uncorked yet," said Judi A. McCormick, senior trust counsel at the American Bankers Association.

The measure still must be considered by a House-Senate conference committee on the minimum wage bill, the vehicle for the legislation. And the House version of the minimum wage bill doesn't contain a trust conversion provision.

For years, supporters of the conversion measure have argued that mutual funds are a more efficient way to manage the smaller sums usually held in common trusts. Assets in common trust funds stood at $131 billion in 1994, according to a report by Federal Financial Institutions Examination Council.

In a change from previous bills, tax relief contained in the Senate minimum wage bill would apply to banks that have already made an indirect fund conversion under Internal Revenue Service code 351, Ms. McCormick said.

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