ICI Comments on Portfolio Manager Disclosure Proposal, May 2004

Washington, DC, May 20, 2004 - The Institute supports but recommends changes to an SEC proposal intended to provide greater transparency regarding portfolio managers, their incentives in managing a fund, and potential conflicts of interest that may arise when they or the advisers that employ them also manage other investment vehicles.

Background
The SEC's proposal would require a fund to disclose information relating to:

the members of a portfolio management team;
other accounts managed by the fund's portfolio manager;
the portfolio manager's ownership of securities in the fund and in such other accounts; and
the portfolio manager's compensation structure.

ICI Position
The Institute generally supports the Commission's objectives, but in a comment letter, expresses concern that certain of the proposed requirements would provide disclosure not meaningful to shareholders or could adversely affect portfolio managers' legitimate privacy interests.

permitting funds with portfolio management teams that consist of more than five members to identify the five individuals with the most assets under management;
requiring funds to disclose only the material conflicts that exist given the type of fund(s) and account(s) at issue;
requiring disclosure stating that the fund and/or its adviser have policies and procedures in place designed to address conflicts of interest, and that the policies and procedures have been approved and are periodically reviewed by the fund's board of directors.
modifying the proposed definition of the term "compensation".