©2006 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.
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January 26, 2006
TO: ACCOUNTING/TREASURERS MEMBERS No. 5-06
BOARD OF GOVERNORS No. 5-06
END OF DAY PRICING FORUM No. 1-06
INTERNATIONAL COMMITTEE No. 2-06
PRIMARY CONTACTS - MEMBER COMPLEX No. 5-06
SEC RULES MEMBERS No. 12-06
SMALL FUNDS MEMBERS No. 10-06
VALUATION PROCEDURES TASK FORCE No. 1-06
RE: INSTITUTE PUBLISHES "THE ROLE OF THE BOARD" IN FAIR VALUATION SERIES
Attached is a copy of the second chapter of the Institute’s new Fair Valuation Series. The
Series is part of the Institute’s ongoing efforts to assist funds and their boards in understanding
fair valuation compliance obligations under the federal securities laws. It is produced in
collaboration with ICI Mutual Insurance Company and the Independent Directors Council.
The second chapter of the Series, entitled “The Role of the Board,” provides practical
guidance for fund directors overseeing the fair valuing of fund securities. It does so by
describing, among other things, the industry’s use of various committee structures to make fair
value determinations, steps that may be taken before engaging a third party pricing vendor and
policies that can be used to oversee the vendor, and scenarios for directors to consider that are
derived from recent SEC enforcement actions.
The first chapter provided an overview of issues funds should consider in developing
and administering valuation policies and procedures. A subsequent chapter of the Fair
Valuation Series will explore funds’ use of external pricing vendors.
Elizabeth Krentzman
General Counsel
Enclosure