Mutual fund boards have come under close scrutiny lately by regulatory and trade groups such as the SEC and Investment Company Institute.

But now, fund companies are facing perhaps even more intense judgement from a private consulting firm that is publishing an index that rates fund families based on how well their boards serve shareholders.

Schlindwein Associates of Chicago has created this rating system, the Mutual Fund Board Index, which rates 138 mutual fund complexes. The index will be updated annually, according to Schlindwein officials.

Nicholas Funds of Milwaukee, Wis. received the number one ranking, while SunAmerica Funds received the worst ranking, placing 138th. The Vanguard Group of Valley Forge, Pa. was number nine, American Funds of Los Angeles was 15th and Janus Funds of Denver was 17th.

The index was published just one day before the SEC announced that it was

creating the Mutual Fund Directors Education Council, which will be run by former SEC Chairman David S. Ruder at Northwestern University in Chicago. The new council is being formed to help educate board directors to ensure their "independence and effectiveness," according to SEC Chairman Arthur Levitt. The chairman has been critical of the fund industry and has urged independent directors who sit on mutual fund boards to take a more active role in safeguarding shareholder interests.

The Mutual Fund Directors Education Council was formed in response to one of the recommendations issued by a group formed by the ICI in March to report on fund board governance. The ICI group had recommended that fund directors receive appropriate education about their responsibility to shareholders.

"The rationale underlying MFBi is that all mutual fund boards should be judged like the board of any public company," said Timothy Schlindwein, managing principal of Schlindwein, in a statement. "In addition to compiling results, favorable or otherwise, MFBi addresses how those results have been achieved under a particular board's stewardship." Schlindwein is the former chairman of Stein Roe & Farnham of Chicago.

Schlindwein believes that the new index will help fund boards evaluate their own performance. He also says that financial advisors, 401(k) plan sponsors and individual investors will be able to use the rating index to help them do their due diligence on mutual funds.

Alleghany Funds of Chicago received the number two spot in the index. Alliance Capital Funds of New York, Ariel Funds of Chicago and BT Funds of New York made up the rest of the top five. Some of the more well-known fund complexes received very low ratings for their boards of directors. J.P. Morgan Funds of New York, for example, was ranked number 122.

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