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To Whom It May Concern


To: Board of Directors XYZ Mutual Fund
CC: Mr. Elliot Spitzer

To Whom It May Concern:

As investors in your fund we have given you our trust in investing our funds specifically in common stocks at your discretion. In return as our fiduciary, it is understood that you will honor that trust by investing only in companies in which you have conducted the necessary due diligence in assessing their investment value.

We have collectively become aware of a disturbing situation that requires an immediate and satisfactory explanation.

It has come to our attention that your fund has been buying shares recently in Federal National Home Mortgage Association (FNM - NYSE) when that company has not issued scheduled financial statements (and has not indicated when they plan to do so) and is currently being investigated by the SEC for accounting issues. Without the company issuing audited financial statements it would be, in our opinion, a breach of your fiduciary responsibility to invest more funds unless you have access to supporting information from some source of high quality.

We specifically require an explanation as to how 1) you have determined that the SEC investigation is without merit and will not result in substantial negative changes to the business of the company going forward and 2) you have determined the financial viability in a company where there are no current financial statements available.

Unless you can provide us with a satisfactory answer to these questions, we will consider you in breach of your fiduciary responsibility and will redeem our funds immediately.


XYZ Fund Holders
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Position in FNM

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