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ICI Urges Modification of Proxy House-Holding Rule

The Investment Company Institute has recommended the SEC tweak proposed rules which would enable fund companies to send only one copy of a proxy statement to a household whose members own the same fund in more than one account.

The SEC should change the so-called house-holding rule for proxy statements so that two details of the proposal are consistent with a similar rule the SEC adopted Nov. 5 for prospectuses and shareholder reports, Kathy D. Ireland, associate counsel of the ICI, said in a Jan. 18 letter to the SEC. The changes would make it easier for funds to cut expenses that ultimately are passed along to shareholders, Ireland said.

The SEC proposal requires that fund companies give shareholders at least 90 days notice before sending only one proxy statement to a household. Funds are required to provide only 60 days notice before sending only one prospectus or shareholder report to a household containing more than one investor in a fund. The ICI recommended the SEC apply the 60-day notice to proxies as well as prospectuses and shareholder reports.

In addition, the proxy proposal would require that the notice be sent in a separate mailing from other literature. The separate mailing requirement does not apply to notices about single mailings of prospectuses and shareholder reports. There seems to be little value in requiring a separate mailing for the proxy notice while such a requirement increases costs, Ireland said. The ICI recommended that the SEC permit fund companies to include the notice in other mailings.