©2005 Investment Company Institute. All rights reserved. Information may be abridged and therefore incomplete.
Communications from the Institute do not constitute, and should not be considered a substitute for, legal advice.
[19104]
August 19, 2005
TO: BOARD OF GOVERNORS No. 38-05
CEOS
COMPLIANCE MEMBERS No. 10-05
INVESTMENT COMPANY DIRECTORS No. 22-05
PRIMARY CONTACTS - MEMBER COMPLEX No. 32-05
PUBLIC COMMUNICATIONS COMMITTEE No. 9-05
SEC RULES MEMBERS No. 94-05
SALES FORCE MARKETING COMMITTEE No. 8-05
SMALL FUNDS MEMBERS No. 72-05
RE: AUGUST 18TH STORY IN REUTERS
I am writing to you on a matter of deep concern to me personally as well as to the
Institute and all its members. Reuters carried a report on August 18th that the Institute “has
quietly changed its stance and now says that it doesn’t represent fund shareholders.” Today’s
Ignites declares that the ICI has “officially stopped representing investors.” I categorically reject
the implication of these reports that the ICI no longer concerns itself about the interests of fund
shareholders.
Over and over during my tenure as President here, in public and private remarks, I have
emphasized that the fiduciary obligations of both fund advisers and fund directors demand
unswerving loyalty to the interests of mutual fund investors. I also have emphasized that, from
the perspective of fund managers, putting the interests of shareholders first is the only
successful business strategy. In profoundly important respects – in both legal and practical
terms – the interests of fund sponsors and fund investors are closely aligned.
The Institute’s public policy positions reflect this same bedrock conviction: a sound
legal and regulatory framework, one that fully protects and affirmatively advances the interests
of fund investors, is absolutely indispensable to the industry’s success. I believe that the record
of the Institute’s work and advocacy over many years demonstrates that we have been true to
the mission entrusted to us in our bylaws – advancing the interests not just of funds, their
directors and advisers, but those of fund shareholders as well.
The Reuters report has as its point of departure the undeniable fact that the members of
the Institute consist of investment companies and their advisers. We are not an organization
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whose membership includes investors or shareholders as such, and in this sense we do not and
cannot claim to represent them. In light of the biting criticism leveled at the Institute in the past
for claiming to “represent” fund shareholders, we have sought to be careful in the way we
articulate our role. The distinction is an important one, if somewhat too subtle to be captured
accurately by the press.
I hope this helps to clarify the recent press report. I would appreciate your contacting
me personally at 202-326-5901 to discuss this or any other aspect of our work.
Paul Schott Stevens
President