Subject: File No. S7-03-04
From: David F Cooley, CFA

June 16, 2006

I have been an investment manager since 1991 and currently do not work for a mutual fund company, but have worked for three mutual fund companies from 1991 to 2005. I decided to write you today because I am familiar with the workings of mutual fund Boards, but I am not conflicted in the opinion I express below.

The safegaurd of a 75% independent Board of Directors is not substantive for fund shareholders. Independent board members are compensated and are likely invited to join or leave by persons whose intentions towards the mutual fund management company include personal loyalty, friendship or other considerations that trump their concern for fund shareholders. In practice, the Board is highly concerned with avoiding lawsuits, and mantain independent legal counsel to do so. They are not highly steeped in evaluating their investment managers, the fund company operations and costs, aside from reports prepared or edited by the investment manager or fund company.

The best safegaurd is to allow shareholders to freely communicate and organize themselves. This may be done by forcing the fund companies to regularly publish a comprehensive list of shareholders a that includes the name and mailing address of the persons who receive shareholder communications materials.

This mandate must come from regulation or the courts, as it is not in the interest of the mutual fund companies, investment managers, or the Board of Directors to make this available. An organized shareholder base will vote out Board members and investment managers that are not acting in their best interest. I urge you to discuss this in the context of your discussion of Board independence.


David F. Cooley, CFA