From: Paul Mulwitz [psm@iols.net] Sent: Monday, September 23, 2002 5:55 PM To: rule-comments@sec.gov Cc: Paul Mulwitz Subject: File No. S7-36-02 Comments. I think requiring Mutual Funds to disclose their proxy voting details is a very poor idea. Some of the reasons are: 1) Most proxy votes are totally meaningless. They involve routine business such as election of directors and approval of auditors. 2) Most proxy votes have a predetermined outcome. It is extremely rare that a director proposed vote fails or a shareholder vote passes. 3) People buy mutual funds because they don't want to manage their investments. The only interest they have is in income and return of capital. By definition, their interest is in the performance of the entire fund -- not in the management of individual holdings in the fund. Those investors interested in participating in shareholder activism are free to buy individual issues rather than mutual fund shares. 4) Mutual fund share owners currently don't even know which stocks a fund holds. To disclose voting would require disclosure of holdings as well. This is not only a heavy burden on the funds, it could also impact the market price of shares of the stocks held by the funds - probably creating more market volatility. 5) I don't see anything special about Mutual Fund holdings. If these votes must be disclosed then many other holders of stocks should also be required to disclose all of their votes. Examples include Retirement Funds, Insurance Companies, other institutional holders, and potentially all stock holders. Then the proxy votes would be completely open for all to see and there would be no such thing as a secret ballot. I judge this proposal to be all cost and no benefit. The costs would show up in administrative efforts by mutual fund managements and in additional reports and related customer service efforts required. This would certainly require mutual funds to increase their annual management fees. I simply see no benefit to this extra reporting requirement -- merely another unfunded mandate from the government. If this is an attempt to increase investor confidence in the stock markets, I feel it will fail miserably. The most important effect this proposed rule will have is to reduce shareholder profits and increase bureaucratic costs. I urge you to defeat this proposed rule and make it go away. Paul Mulwitz 32013 NE Dial Road Camas, WA psm@iols.net Individual Investor and Shareholder -- ---------------------------------------------------------------------- "Penmaker" (ebay.com, amazon.com) "WoodPenMaker" (auctions.yahoo.com) psm@iols.net http://www.geocities.com/woodpenmaker/index.htm http://www.geocities.com/woodpenmaker/photos.htm http://members.ebay.com/aboutme/penmaker/ Paul Mulwitz 32013 NE Dial Road Camas, WA 98607 ----------------------------------------------------------------------