Investment Company Amendments
The amendments the Commission approved with respect to mutual funds and other registered management investment companies require the following.
- Investment Company Proxy Voting Policies and Procedures. The amendments will require a fund to disclose in its registration statement the policies and procedures that it uses to determine how to vote proxies relating to portfolio securities. This disclosure would include the procedures that a fund uses when a vote presents a conflict between the interests of fund shareholders, on the one hand, and those of the fund's investment adviser, principal underwriter, or certain of their affiliates, on the other. Disclosure of proxy voting policies and procedures will apply to filings made on or after July 1, 2003.
- Investment Company Proxy Voting Record. The amendments will require a fund to file new Form N-PX, containing its complete proxy voting record for the 12-month period ended June 30 by no later than August 31 of each year. Funds will be required to disclose the following information for each matter with respect to which a fund was entitled to vote: information identifying the matter voted on; whether the matter was proposed by the issuer or by a security holder; whether and how the fund cast its vote; and whether the fund cast its vote for or against management. Funds will be required to make their first proxy voting disclosures not later than August 31, 2004, for the 12 months ending June 30, 2004.
- Availability of Proxy Voting Information to Fund Shareholders. A fund will be required to state in its reports to shareholders that information about the fund's proxy voting policies and procedures is available without charge, upon request, by calling a specified toll-free (or collect) telephone number; on the fund's Web site, if applicable; and on the SEC's Web site. A fund will be required to state in its registration statement and reports to shareholders that the fund files its proxy voting record with the SEC and that the record is available on the SEC's Web site and from the fund. A fund will be permitted to make the proxy voting record available either on its Web site or upon request.
The amendments that the Commission adopted with respect to investment advisers will require the following.
- Investment Adviser Proxy Voting Policies and Procedures. The new rule will require investment advisers that exercise proxy voting authority over client securities to adopt and implement written policies and procedures for voting client proxies. The policies and procedures must be reasonably designed to ensure the adviser votes client securities in the best interests of clients, and they must address how the adviser addresses material conflicts of interest that may arise between the adviser and its clients.
- Proxy Voting Information for Advisory Clients. The new rule will require investment advisers to describe their proxy voting policies and procedures to clients, and furnish a copy of them to clients upon request. The rule also requires investment advisers to tell clients how they can obtain information from the adviser on how the clients' securities were voted.
The full text of detailed releases concerning each of these items will be posted to the SEC Web site as soon as possible.