Jessie Smith Noyes Foundation
6 East 39th Street, New York, NY 10016

December 2, 2002

Jonathan G. Katz
Secretary
Securities and Exchange Commission
450 Fifth Street NW, Room 6012
Washington, DC 20549-0609

Re: Comments regarding File Numbers S7-36-02 and S7-38-02

Dear Mr. Katz:

The Jessie Smith Noyes Foundation supports the final adoption of Rule S7-36-02 and Rule S7-38-02. We believe that both rules will provide investors with greater transparency regarding the decisions made by mutual fund managers and investment advisors with whom they do business.

The Noyes Foundation was established in 1947 and currently has assets totaling approximately $60 million, $23 million of which is invested in domestic and international equities. The Foundation is committed to protecting and restoring Earth's natural systems and promoting a sustainable society. Grants are made in the areas of the environment and reproductive rights.

The Noyes Foundation recognizes that our fiduciary responsibility does not end with maximizing return and minimizing risks. We believe that in light of the social, environmental and economic challenges of our time, fiduciary responsibility dictates the integration of prudent financial management with principles of environmental stewardship, concern for communities, and corporate accountability to shareholders and stakeholders alike.

The Foundation votes it proxies as follows:

  • When an issue is directly related to one of the program funding areas of the Foundation, proxies are voted in a manner consistent with them.

  • When an issue deals with a social or environmental matter not directly related to the Foundation funding program areas, the Foundation reviews each individual case before voting its proxies.

On issues of corporate governance, proxies are voted according to the following general guidelines:

  • Ratify auditors

  • Ratify directors, unless governance or a program interest issue has been raised or there is a lack of diversity on the board

  • Vote against golden parachutes for executives

  • Vote for proposals requiring a majority of independent directors

  • Vote for proposals requiring nominating and/or compensation committees to be composed exclusively of independent directors.

  • Vote against incentive payments not related to financial performance

  • Vote for incentive payments that are tied to social and environmental performance

  • Vote for proposals recognizing the standing of stakeholders other than shareholders in governance and control

Under current rules, the Noyes Foundation does not automatically have access to the proxy guidelines used and proxy votes made by the managers of the co-mingled funds in which we have invested. The proposed rules will give us information we need to know to ensure that proxy voting by fund managers is consistent with the social, environmental and corporate governance interests of the Noyes Foundation. The rules will also give us important data that we can utilize when searching for new fund managers. Lastly, the rules will encourage fund managers to be more proactive and engaged with the companies in their portfolios.

The Noyes Foundation and we believe millions of other investors want our invested dollars to be used to advance responsible corporate conduct and promote greater corporate accountability. Transparency requirements for mutual funds and investment advisers along the lines proposed by the SEC rules are critical components of restoring investor faith in corporate America.

Rule S7-36-02 - Disclosure of Proxy Voting Policies and Proxy Voting Records by Registered Management Investment Companies

The Jessie Smith Noyes Foundation recommends final adoption of this rule with the following suggested modifications:

  1. Proxy votes and guidelines should be posted on the fund's web site, if one exists. Information should be included in the fund's prospectus and annual report on how to obtain written reports on proxy votes and guidelines.

  2. The SEC should provide more specific guidelines as to the specific issues to be addressed in a proxy voting guideline. It is important for investors to have a uniform set of standards upon which to judge individual fund managers.

  3. The fund managers must clearly describe the issue on which a proxy vote was made.

  4. There should be an annual summary of the fund manager's proxy voting record, describing the votes that were cast supporting management's position.

Rule S7-38-02 - Proxy Voting by Investment Advisers

The Jessie Smith Noyes Foundation recommends final adoption of this rule with the following suggested modifications:

  1. Proxy votes and guidelines should be posted on the investment adviser's web site, if one exists. In lieu of a web site, the adviser should provide written information annually on how to obtain written reports on proxy votes and guidelines.

  2. The SEC should provide more specific guidelines as to the specific issues to be addressed in a proxy voting guideline. It is important for investors to have a uniform set of standards upon which to judge investment advisers.

  3. There should be a uniform format for disclosure of advisers' proxy voting records. The format for advisers should be the same as that proposed for mutual funds.

The Jessie Smith Noyes Foundation strongly supports the direction the SEC has taken to ensure that investors are provided with sufficient information upon which to make intelligent decisions regarding where and with whom to invest their money.

Thank you for the opportunity to comment on Rules S7-36-02 and S7-38-02.

Sincerely,

Victor De Luca
President