Subject: File No. S7-12-04
From: David Spurr
August 26, 2004
With regard to ownership of portfolio managers securities in a fund.............It is very important that managers disclose all of their investment holdings, both in the fund and outside of the fund.
A manager could be long the fund and the investor would assume that as a result of the long position in the fund the mangers interests are aligned with the shareholders; however, outside of the fund the manager could be short the holdings in the fund - which would neutralize the long position as well as alignment with the shareholder's interests. Disclosing ownership in the fund alone does not tell the whole story. A portfolio manager should be forced to disclose his investment holdings outside of the fund as well as inside the fund !!