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Selection of Directors

New independent directors are nominated by existing independent directors and then elected by the full board. Sometimes, based on requirements of the 1940 Act, new directors also must be elected by shareholders. The 1940 Act generally requires that, before adding a new director, at least two-thirds of the then-serving board members be elected by the fund’s shareholders. When a new fund complex is launched, the fund sponsor (often the fund’s investment adviser) typically is the initial and sole shareholder of the new funds and elects the initial slate of directors.

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