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Fund Boards and Corporate Boards

The duties of mutual fund directors are somewhat different from corporate directors because of the unique structure of mutual funds. Like the directors of a corporate board, mutual fund directors oversee the management and operations of a company (the fund) and have a fiduciary duty to represent the interests of shareholders. Because a fund has no employees and the board relies on the adviser and other service providers to run the fund’s day-to-day operations, the board focuses on the performance and fees of these entities under their respective contracts and monitors potential conflicts of interest.

It is important to note that the mutual fund board is not the board of the fund adviser. In fact, in some cases, the adviser may itself be a public company with its own board of directors and shareholders. Thus, while the fund board oversees the services the adviser provides to the mutual fund, it does not oversee the management and operations of the adviser.