WASHINGTON It was a first for the largely introspective ICI: Uncut, plain-speaking videotapes of investors on their mutual fund holdings and, all too often, a dim view of the industry (see ICI Rolls Unvarnished Shareholder Videotape, www.mmexecutive.com, 5/12/05).

The overall mood at the Investment Company Institutes general membership meeting this year was an optimistic return to business as usual. Even the entertainer for the big dinner at Union Station, comedian Greg Giraldo, got executives to laugh at themselves with a joke about selling mutual funds to any homeless folks outside the station.

Meanwhile, most of the main speakers, including company presidents, chairmen, industry analysts and other key executives admitted the hard truth (see Kevin Burkes and James Amends GMM coverage, page one).

And the hard truth is that more than 70 top executives have been publicly denounced and ousted from their scandal-tainted firms. Privately, there could be even more. At this years ICI, there was repeated talk about damage control on what were once-stellar brands. ICI Chairman James S. Riepe expressed concerns about disclosure stampede, not creep. And then there was that videotape. At best, some investors said they were confused and that the industry was guilty of a lack of candor. At worst, they said they thought fund executives were gougers or no better than everyday crooks.

The other big takeaway from this year is that profit margins, which soared as high as 38% at the apex of the bull, are now being tightly compressed, with some analysts projecting a decline down to the range of 27%.

The bottom line, speakers said, is that brand, size and stealth will matter like never before. Brian Zino, chair of the GMM committee and president of J. & W. Seligman & Co., probably said it best: We dont want to sit here and make excuses. We must directly face those criticisms as we go forward.

Get ready for a new, narrower market share race.

(c) 2005 Money Management Executive and SourceMedia, Inc. All Rights Reserved.

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