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Foreword by
Edward C. Bernard

Letter from the
Chief Economist

ICI Research:
Staff and Publications

Chapter 1:
Overview of U.S.-Registered Investment Companies

Chapter 2:
Recent Mutual Fund Trends

Chapter 3:
Exchange-Traded Funds

Chapter 4:
Closed-End Funds

Chapter 5:
Mutual Fund Fees and Expenses

Chapter 6:
Characteristics of Mutual Fund Owners

Chapter 7:
The Role of Mutual Funds in Retirement and Education Savings

Data Tables

Appendix A:
How Mutual Funds and Investment Companies Operate

Appendix B:
Core Principles Underlying the Regulation of Mutual Funds and Other Registered Investment Companies

Appendix C:
Statistical Releases and Research Publications

Appendix D:
Significant Events in Fund History

Glossary

Fact Book Archive

Foreword

by Edward C. Bernard
Chairman of the Investment Company Institute and
Vice Chairman of T. Rowe Price Group, Inc.

On a shelf in my office, I have a row of Fact Books dating back to 1988—the year that I joined the Investment Company Institute’s Direct Marketing Committee. The first in my collection, then called the Mutual Fund Fact Book, is a slim volume of brief articles from the days when 401(k) plans were in their infancy and Ginnie Mae funds were booming.

The year it chronicles, 1987, was a tough one for our industry: sales fell sharply over the summer, even before the stock market suffered what was then the largest single-day fall ever on October’s Black Monday. Yet by year-end, fund assets had climbed to more than $769 billion, up 7.5 percent from 1986. The 1988 Fact Book makes no mention of index funds or target date funds, let alone exchange-traded funds, but offers pages of detailed data breaking down fund sales by states and regions.

The 2010 Investment Company Fact Book paints a picture of a far more mature and developed industry: funds hold $12.2 trillion in assets, pursue wide-ranging investment strategies through a wealth of fund choices, and help 44 percent of the households in America as they strive to meet their financial goals. Yet I still pull that 1988 Fact Book off the shelf to remind myself of what remains constant.

Take, for example, the Fact Book’s mission. From the very first edition—titled Investment Companies, A Statistical Summary 1940–1957—ICI’s annual publication has provided the single most valuable source of data and information on the scale, operations, and uses of mutual funds and other investment companies. Before there was Morningstar or Strategic Insight, the Fact Book was the central repository of information on funds—and those competitors have not dislodged it.

Then there’s the tone—straightforward and factual. This is neither a sales pitch for funds nor a partisan polemic, but an objective annual assessment, informed by deep expertise, of the state of our industry. Another constant is the emphasis on responding to the needs of investors. “By keeping attuned to investor needs, the mutual fund industry has been able to adapt and expand its product line and services to suit just about any investor’s goals”—a statement as true today as it was in 1988.

Yet my collection also illustrates the shift over time in the Institute’s priorities and approach. In its early days, the main goal of ICI’s statistical and research program was to help the industry understand itself and its investors as mutual funds struggled for a place in a world dominated by banks, brokers, and insurance salesmen. By the late 1980s, funds were increasingly woven into the financial life of ordinary Americans, but my 1988 Fact Book still places a heavy emphasis on marketing.

Today, thanks in no small part to the innovation of fund entrepreneurs, the middle class has become the money class. Almost 90 million Americans are mutual fund shareholders. As funds took on this central role, issues of savings, taxation, retirement policy, and college funding have taken center stage on the Institute’s agenda—and today’s Fact Book reflects those priorities. Now the Fact Book can be found on desks on Capitol Hill and throughout the Executive Branch—all places where ICI’s expertise and insights into funds, their shareholders, their operations, and their policy issues are sought and respected.

Of course, the Fact Book is just the most visible product of a 40-person-strong research and statistical operation that is unmatched by any other financial industry group. This unique resource grounds ICI’s regulatory and legislative efforts in disciplined data collection and rigorous analysis. It gives our industry the credibility it needs to advocate on behalf of funds and their investors.

Again this year, the ICI Research team has brought all of its expertise and insight to bear to produce a remarkable publication, a capsule portrait of all that our industry has to offer. Brian Reid and his staff are carrying on a great tradition. The 2010 Fact Book is the fiftieth edition in this series, and it is true to its predecessors—thorough, factual, and objective. It will go on the shelf to join my collection, but I know I will reach for it often—now and for years to come.

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