From: Matthew Feigin [mfeigin@graduate.net] Sent: Thursday, December 05, 2002 12:36 AM To: rule-comments@sec.gov Subject: File No. S7-36-02 I would encourage the commission to adopt its proposed rule on Disclosure of Proxy Voting Policies and Proxy Voting Records by Registered Management Investment Companies. As an owner of shares in funds that would be subject to the rule, I find the value of knowing how my shares will be voted outweighs the minimal compliance costs. I followed the links in the Commission's proposal to several sites that explained policies and/or past votes in a format that I would have found very helpful if I owned the funds in question. I would commend as models http://www.proxymaster.com/domini/, http://www.paxfund.com/bfproxy/setup.htm http://flagship5.vanguard.com/VGApp/hnw/web/corpcontent/vanguardviews/jsp/VanViewsNCArticle.jsp and http://flagship5.vanguard.com/VGApp/hnw/web/corpcontent/vanguardviews/jsp/VanViewsSIArticle.jsp, which expresses in plain English what a fund has used its leverage for. If the manager of a given fund feels that maintaining good ties with management is the most important factor at stake with a particular proposal, and should thus govern their vote on that proposal, then the manager can explain that attitude to the fund owners. A rule should therefore require that funds distinguish shareholder from management proposals and identify votes against management. In recent years investors have become increasingly concerned about executive compensation. The policy disclosures to be required under the rule, if sufficiently detailed (like those I mentioned above) will allow mutual fund owners to determine whether their proxies are being cast for excessive compensation or packages that undermine executives' interest in the long-term competitiveness of their companies. Such openness can only reduce the number of such packages, which will benefit the market as a whole. The proposed rule would also help holders of mutual funds evaluate socially motivated proposals - usually from shareholders - that ask companies to look beyond the simple profit motive on issues such as domestic partnership benefits for employees or dealings with particular countries. These proposals may be good or not. But the shareholders are the ultimate authority in a publicly held company or in a fund. They should be able to see what policies their money is used to promote, and to control their money by complaining to fund management or withdrawing if their wishes are not honored. For these reasons, I would encourage the Commission to modify its proposal only in the direction of greater disclosure. In particular, I am skeptical of including information about past proxy votes or future policy in the Statement of Additional Information, which not all shareholders get. Indeed, many shareholders may be more concerned about voting on socially motivated proposals than about many financial details that must be mailed to them. I encourage the Commission to require that semiannual and annual reports include at least instructions for finding disclosures on the Internet, clearly labeled under a separate heading. Ideally shareholders should have even more information on past votes. The sites above may not a vote against management on a compensation plan, but not say what elements of the plan inspired the vote. Evaluating a proposal to, say, divest from South Africa requires even more information. Providing more information, however, would be inconvenient and costly. Companies might, however, be required to provide more detail about the most hotly contested proposals - i.e. those in which the vote was within a set margin of 50% or another threshold level required to pass the proposal. Votes contrary to the fund's established policy also demand more detailed explanation. The minimum explanation for a vote against management could be a citation , by number, of the policies that supported These quibbles to not, however, undercut my support for a well-thought-out proposal that would improve on the status quo. Sincerely, Matthew A. Feigin, Esq.