April 7, 1995
TO: BOARD OF GOVERNORS No. 43-95
RE: ""INVESTMENT COMPANY ACT AMENDMENTS OF 1995""
______________________________________________________________________________
Today, House Telecommunications and Finance Subcommittee Chairman Fields and Ranking
Member Markey introduced the “Investment Company Act Amendments of 1995”. Among other
provisions, the bill would:
` Modify the definition of “majority vote” under the Act to make it easier for funds to receive
shareholder approval of actions, drop the requirement that shareholders approve the selection of
independent accountants and add a requirement that shareholders approve changes in a fundGs
investment objective.
` Allow the SEC to permit mutual fund advertisements to contain information the “substance of
which” is not included in the fundGs prospectus.
` Establish an exemption under the Act for funds sold only to institutional investors and wealthy
individuals that meet certain thresholds set forth in the bill. Consistent with the InstituteGs position,
the SEC would not have the discretion to lower these standards.
` Require that all mutual funds have a majority of independent directors and that independent
directors be self-nominating, and allow the independent directors to cancel an advisory contract.
` Establish an exemption from the statutory restrictions on “funds of funds” for certain funds that
invest in affiliated funds, and allow the SEC broader authority to exempt other funds from the
restrictions.
`,mes by rule or by order.
• Allow the establishment of “unified fee funds”, which would be funds with relatively fixed expense
ratios that would be exempt from certain provisions of the Investment Company Act.
Attached for your information are: a copy of the bill and section-by-section analysis, Chairman
FieldsG introductory remarks, and the InstituteGs press release expressing support for the bill.
Hearings are expected in May or June with floor action thereafter.
Matthew P. Fink
President
Attachments