Looking at the current economic landscape, we know the challenges our industry faces today may be like storms we have weathered in the past. Challenges often become catalysts for important changes in regulation, technology and business practices.
In the late 1970s, high interest rates and changes to banking regulations led to the growth of money market mutual funds. Abuses of defined benefit plans led to the passage of ERISA legislation in 1974 and ultimately to the growth of the defined contribution industry. Black Monday was followed within a few years by the bull market of the early 1990s and expansion in the mutual fund industry. Scandals early in this decade led to legislation aimed at protecting the shareholder.
The resilience of our industry and its response to these challenges is largely the result of the unique relationship between the industry associations that work closely with regulators and lawmakers; the technology and service providers that develop new tools and business practices; and the fund companies that supply new products and market solutions. The collaborative and innovative nature of our industry has enabled us to not only endure rocky periods but become stronger because of them.
Through these dynamic times, the Investment Company Institute, which last week celebrated the 50th anniversary of its annual General Membership Meeting, has fought for public policy that benefits mutual funds and their shareholders, advocating regulation and legislation that it believes is efficient, effective and even-handed. In his opening remarks at the meeting last week in Washington, D.C., Edward Bernard, vice chairman of T. Rowe Price Group and chairman of the ICI General Membership Meeting planning committee, spoke of the industry's fiduciary culture, its embrace of regulation and its "laser sharp" focus on servicing investors as foundations of the industry's future.
As technology and service providers, DST Systems, Inc. and Boston Financial Data Services (which this year celebrates its 35th anniversary) have established long track records for developing solutions in support of these foundations. DST and Boston Financial contribute to the success of the fund industry by continually anticipating and responding to ongoing changes in the market in order to meet the evolving needs of our clients and their shareholders.
For example, this year marks the 10th anniversary of DST Vision, an account management Web site that has transformed the working relationship between independent intermediaries and management companies, improving the service intermediaries can provide shareholders. To help funds navigate continuous regulatory changes, DST and Boston Financial provide services to assist funds in understanding industry practices and determining their own practices. These include timely technology enhancements and specialized tools, such as the sample program and comprehensive board guide we developed to help firms address the requirements of SEC 38a-1.
Facing the Future Together
As the industry addresses today's challenges, we do so with an eye to the future and to the opportunities that may emerge. For example, the international ripple effect we see as economic conditions in one market so clearly affect conditions in others highlights the increasingly global nature of our business. Similarly, changes in trading regulations abroad affect asset management strategies at home.
The foreign regulatory and economic climate currently favors the establishment of collective funds in domiciles abroad, particularly in Europe. Recent trends bear this out, indicating a shift in the pace of fund growth internationally, with European-domiciled funds gaining in size and growth while the U.S. fund market share declines.
Asset managers looking to take advantage of opportunities overseas must be aware of the challenges unique to international fund operations and distribution. They face a wide range of tax structures, regulatory requirements and risk management concerns, including local language requirements, multiple trading platforms and local market practices. In these conditions, asset managers look to vendors like DST, Boston Financial and our international affiliates to provide local market knowledge and support, global technology solutions and a long-term commitment to helping them meet challenges abroad.
The ICI, meanwhile, works with foreign legislators, regulators, securities market officials and other market participants to ensure that capital markets operate efficiently. It also seeks legislative and regulatory improvements that enhance the competitiveness of U.S. money management firms abroad.
Times change, markets cycle and we respond in creative and collaborative ways. For 50 years the ICI has supported the asset management industry, and we at DST and Boston Financial congratulate the Institute on its role in leading the industry through five decades of change, challenge, innovation and growth. We look to the future with a perspective gained from years of collective experience in meeting industry challenges and developing solutions.
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