Resolution of the Board Of Governors of the
Investment Company Institute

October 3, 2003

Whereas, the strong system of corporate governance for management investment companies has benefited investment company shareholders and served as a model for corporate governance reforms for operating companies; and

Whereas, measures to further strengthen investment company governance will help ensure the continued success and integrity of this system and bolster investor confidence; and

Whereas, an Advisory Group on Best Practices for Fund Directors, whose appointment was approved by the Institute’s Executive Committee, issued a report on June 24, 1999 that recommended a series of best practices to investment company boards of directors to enhance board independence and effectiveness; and

Whereas, the Board of Governors of the Institute unanimously adopted a resolution at a meeting on July 7, 1999 recommending that all Institute management investment company members take such actions as may be appropriate to implement the practices recommended in the report; and

Whereas, many fund boards have adopted these best practices, and universal adoption by the boards of directors of all Institute management investment company members would further promote investor confidence; and

Whereas, the strict standards for independence under the Investment Company Act of 1940 do not address certain family relationships that should disqualify persons from serving as independent directors of an investment company (e.g., aunt, uncle or cousin of a person who is affiliated with the company, its investment adviser or principal underwriter); and

Whereas, the audit committees of some open-end management investment companies have voluntarily implemented standards similar to those required for audit committees of exchange-listed companies under Section 301 of the Sarbanes-Oxley Act of 2002 and implementation of such standards by the audit committees of all Institute open-end management investment company members would benefit shareholders of those companies; and

Whereas, the Executive Committee of the Institute issued a report on September 5, 2003 recommending the adoption of best practices with respect to (1) close family members serving as independent directors and (2) audit committee standards; now, therefore let it be

RESOLVED, that the Board of Governors recommends that all Institute management investment company members take such actions as may be appropriate, to the extent they have not already done so, to implement the Advisory Group’s best practices recommendations as set forth in the Appendix to this resolution; and it is further

RESOLVED, that the Board of Governors recommends that Institute management investment company members adopt policies prohibiting any close family member of an employee, officer or interested director of the company, its investment adviser or principal underwriter from serving as an independent director of such company; and it is further

RESOLVED, that the Board of Governors recommends that all Institute open-end management investment company members take such actions as may be appropriate to implement standards similar to those applicable to audit committees of exchange-listed companies under Section 301 of the Sarbanes-Oxley Act; and it is further

RESOLVED, that the Chairman of the Board of Governors and the Institute’s President shall send a letter to each Institute management investment company member urging prompt implementation of the foregoing recommendations.