As the Securities and Exchange Commission and the U.S. Chamber of Commerce continue to battle it out in court over the independent chairman rule that requires 75% of a mutual fund's board, including its chairman, to be independent, a new study on the subject might surprise some in the industry.

In 2004, 78% of the directors at fund companies were independent, a survey of 1,500 directors overseeing 8,000 funds shows, according to The Wall Street Journal. But even 10 years ago, 71% of the directors at mutual fund boards were independent. That increased to 75% in 2002. The Investment Company Institute and the Independent Directors Council have conducted the survey every other year for the past 10 years.

Also on the bright side for governance advocates, independent directors are meeting more frequently without management present. In 2004, 73% of fund boards held such meetings, up from 58% in 2002 and 28% in 1998. They are also more inclined to have independent counsel, with slightly more than half of independent directors reporting that they had retained a lawyer with no ties to the fund company in 2004. In 1998, only about one-third had done so.

However, only 43% of funds had an independent chairman in 2004.Yet, another 18% had a lead independent director, which the ICI designated as a best practice in 1999. In 1996, a mere 22% of fund chairmen were independent.

The survey also found that most fund boards still meet only quarterly. However, 20% of boards meet five or six times a year, up from 5% in 1994, and 6% meet seven or more times a year, up from 3% a decade earlier.

The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.

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