Looking Out for Shareholders
Aquila’s locally-based trustees play a crucial role in advocating on behalf of fund shareholders. As Anne J. Mills looks back on her tenure as a trustee on seven Aquila fund boards, we talked to her about what trustees do and what she’s seen in almost 30 years as a trustee.
How did you become involved with the Aquila Group of Funds?
Lacy Herrmann [Aquila’s founder] and I met in the mid-1980s, when we were both running for president of our college’s alumni board. He beat me, although I did win a few years later.
In 1986 he was starting Aquila Tax-Free Trust of Arizona and was looking for trustees. He wanted people with a diversity of experience and opinions. Even then, he was conscious of building boards that would include both male and female trustees.
I was an executive in financial planning at IBM at the time, so I offered that experience. When he started Aquila Churchill Tax-Free Fund of Kentucky a year later, he recruited me and a fellow alumna, an extremely accomplished woman who had been the CEO of the Smithsonian Institution, the National Gallery, and the Metropolitan Museum in New York.
Lacy was a delightful, bright, wonderful person who had a knack for attracting very competent, accomplished people to the Aquila Group of Funds boards.
What does a mutual fund trustee do—and why should shareholders care?
The sole purpose of a fund’s board is to represent shareholders. Trustees watch over implementation of the investment strategy and cost containment, seek to insure that shareholders receive the best support and service that can be provided, and strive to be sure that conflicts of interest are avoided, among other duties. It’s a fiduciary responsibility, which in fact is the highest level of responsibility in financial services. Shareholders should care because we’re the ones who exercise care on their behalf.
My expertise is financial controls. I’m always on watch for things that might go wrong—trying to ensure they don’t, and if they do, understand why, and then seek to ensure that processes are analyzed to avoid recurrences and that corrective procedures are implemented. Other trustees bring other skills. For example, many Aquila fund boards include a CPA and a local economist.
We all feel our fiduciary duty very deeply. And we’re all shareholders [in the funds we oversee], so we see the same reporting and communications that other shareholders do, and participate in the same investment experience.
What makes the Aquila Group of Funds’ trustees unique?
Many of us are locals who live in the state represented by the fund. In attending the local shareholder meetings held for each of the funds, each of us has built relationships with shareholders state by state. It’s a more personal relationship with shareholders than I think almost any other mutual fund company can claim.
Local board representation and local meetings are a real benefit for shareholders, in my view. Shareholders who attend our meetings get a good feel for the high-quality investments in their fund, and how their money is managed in an effort to reduce risk. Investors understand more about how their money is managed, and can evaluate the risks associated with these portfolios.
It also benefits financial advisors. When they attend our shareholder meetings, they along with fund shareholders have the opportunity to meet and ask questions of the trustees and management.
As a trustee, what are you most proud of having accomplished on behalf of shareholders?
I’d say restructuring five municipal bond funds [the Arizona, Colorado, Kentucky, Rhode Island and Utah funds] into one business trust, Aquila Municipal Trust. When these funds started nearly 30 years ago each was set up as a separate trust, with local trustees and local infrastructure to gain recognition and break into each state. It was very useful and helped establish the funds.
Over time, it was felt that restructuring the trusts would benefit shareholders by providing efficiencies in the oversight and administration of the funds.
“Restructuring the trusts” sounds dry but it should represent efficiencies for the benefit of shareholders.
What does the future hold for you, and for Aquila?
I’m 75 and have retired in accordance with our retirement policy, although I’m still a consultant to the Aquila Municipal Trust board. My husband and I still split our time between Arizona and Colorado. I’ll continue as a trustee emerita at Brown University; at Ottawa University, where I’m a life trustee; and at the American Baptist Foundation, where I’m the founding chair and still serve on the investment committee. I also volunteer for a number of organizations.
Today, 30 years after the founding of the Aquila Group of Funds, the business pressures have changed and the roles of the trustees have changed significantly. I think the Aquila Group of Funds is managed exceptionally well. I feel I’m leaving the Funds in very good hands.