From: John G. Innes []
Sent: March 7, 2004
Subject: File No. S7-03-04

In general I agree with you proposed rules in File No. S7-03-04 which seems well balanced, as far as they go. However, I also agree strongly with the comments in the article, "Mutual-fund giants spar over SEC's directors proposal" by Jeff Brown of the Philadelphia Enquirer, as published 7 March 2004 in the Seattle Times. That is, unlike the lack of democracy for shareholders in corporations, there is a very strong case for, "... real democracy in funds annual votes for directors and a streamlined way for shareholders to nominate candidates to compete with those picked by the directors."

My comments follow regarding the items in your proposal:

A. Board Composition

The number of independent directors should be 75%, or two more than the number the company by-laws require to pass any board resolution, whichever is the greatest.

The phase-in time period should be 18 months or less.

B. Independent Chairman of the Board

Either the chairman of the fund's board of directors should be an independent director, or all board members must be independent of all investment advisory companies.

C. Annual Self-Assessment

A written assessment of the board of directors work during the year should be a requirement. Rather than specifying the number of boards on which a director may sit, I suggest that each director do a written assessment of that director's effectiveness on each fund board, plus provide a written log of time spent on matters affecting each fund, and a similar log of time spent on work not related to fund matters. Those written assessments and time logs should be available to shareholders prior to board member elections so shareholders might make a more effective determination of the likelihood that a board member has performed well.

D. Separate Sessions

Quarterly separate sessions of the independent directors would be very worthwhile.

E. Independent Director Staff

The proposal stated in the first paragraph of this section is a desireable rule, with two suggested changes:

1. The independent staff should be a requirement explicitly to help prepare for and assist at quarterly meetings of independent directors. Each board member need not have a staff, but the independent directors as a whole must.

2. The rule should be expanded to include independent legal counsel.

F. Recordkeeping for Approval of Advisory Contracts

The proposal is very sound. My only question is whether such materials would be available to shareholders as well.

Thank you for listening.

John G. Innes
948 Turkey Tree Road
Galena, MO 65656