From: Kathy Zube [KZube@catholicknights.com]
Sent: Friday, November 08, 2002 8:49 AM
To: rule-comments@sec.gov
Subject: File No. S7-36-02




November 8, 2002 


TO:		rule-comments@sec.gov 
Subject:	File No. S7-36-02


On behalf of the shareholders of The Catholic Funds, I would like to submit some 
additional comments about the proposed rule change by the SEC on proxy voting.  

The current opposition of the mutual fund industry to disclosing their proxy votes 
is a travesty of justice and an irresponsible exercise of the fiduciary duty incumbent 
on those in positions of trust.  

Can you imagine if we elected our representatives to Congress and the Senate and asked 
that they disclose their votes and they refuse to do it?  It would be an outrage.  

We entrust the principals of the mutual funds to vote our shares on a proxy basis-but 
they refuse to disclose how they voted.  This is also an outrage. 

We of The Catholic Funds believe in shareholder democracy that includes the 
responsibility of those operating mutual funds to disclose how they vote the shares.  
For the most part, the majority of mutual funds vote their shares to support management 
proposals.  There are very good reasons that the mutual fund industry, as a whole, does 
not want to disclose their votes. We think there are a couple of important reasons why 
people and principals of the mutual fund business do not want to disclose their actions.  

The reason they do not want to disclose their votes is that they have not developed 
appropriate corporate governance guidelines to instruct their proxy votes.  For example, 
they have not developed positions on stock option grants when they are limited to the 
few at the top of the corporations and therefore they have voted to support the greed 
frenzy that has gone on at the top of American corporations.  They have not defined 
their positions on the independence of auditors who frequently make the majority of 
their fees from doing consulting work for the corporations they're auditing.  They 
have not taken positions about disclosure of deferred compensation to top executives 
nor have they taken positions on independent directors and the need for all boards to 
have a majority of independent directors.  

Clearly, the word for the captains of the mutual fund industry is-whatever management 
wants, management gets.  This gives free reign to management and ignores the best 
interests of shareholders.  This is the reverse of the philosophy of corporate governance, 
which says that the shareholders' interest should prevail over management's interest.  

This practice has to stop.  Mutual funds should disclose on what basis they are going to 
vote their shares and what their philosophy is about corporate governance.  The shareholders 
of the mutual fund industry have a right to know. 

Many investors clearly could care less how proxies are voted.  This is because shareholders 
in mutual funds frequently have short-term horizons.  They're looking for gains on their 
mutual fund investment and that's it.  This unfortunately is not the theory upon which 
the mutual fund business and corporations are supposed to be governed.  Shareholders-the 
owners of corporations-should be prudent, diligent and care about the long-term prospects 
for a corporation.  Ownership of stock is a privilege, but with it comes responsibilities, 
and shareholders can benefit by knowing how their shares are voted.  

The SEC should force the industry to make this information available to shareholders so 
they can begin to see, as owners of companies, how their votes are being cast.  

This tragedy of shareholder democracy must end, and the industry should be forced to 
disclose how it votes these shares. 

Sincerely,


Daniel J. Steininger
Chairman, The Catholic Funds 

The Catholic Funds are distributed through Catholic Financial Services Corporation. 
1100 West Wells Street, Milwaukee, WI 53233.  Member NASD and SIPC.
(414) 278-6550 - Toll Free (877) 846-2372