The Securities and Exchange Commission announced last Thursday that it will require mutual funds and their investment advisors to disclose their proxy votes and have fund executives certify the accuracy of their financial statements. Subject to further review by the Office of Management and Budget, the proxy requirement could take effect as early as this summer, as the SEC is recommending annual release of this information on or before Aug. 31 of each year. The commission is recommending that fund companies have the choice of posting the files on their Web sites or making them available in hard-copy form. As to the timetable for certification, a spokesman for the SEC could not specify when the certification requirement could take effect.

Investors and the American public have won yet again, Paul Roye, director of the SEC's division of investment management, said as he made the announcements.

While the fund industry had voiced its resistance to certification, it spoke out in uncharacteristic fervency against the proxy issue. Not only did the chairmen of fund giants Fidelity Investments and Vanguard join forces in penning an editorial in The Wall Street Journal, but last week, the Investment Company Institute sent leading financial publications and the SEC 25 pounds of tomes representing proxy disclosures for just three mutual funds.

Granted, the 777-page report for the Fidelity Spartan Total Market Index fund, the 467-page report for the T. Rowe Price Extended Equity Market Index fund and the 648-pager on the Vanguard Balanced Index fund were all for index funds. But according to the ICI, there are 214 funds with disclosure spreadsheets of 99 pages or more.

"I'm sure that all 7,000 people who sent in their form letters in favor of the proxy issue can't wait to do a line-by-line examination of each of those phone book-sized documents," said an ICI spokesman. He added that the documents were so large that when the institute tried sending them as individual electronic files to the SEC, the network rejected them because of their size.

"I affectionately refer to the phone books' from the ICI as truth in advertising,'" quipped one commissioner during the open meeting. Noting that one of the reports, for the Vanguard fund, was for a fund with one of the biggest holdings of them all, he said, "I am sure this was a well-intentioned effort to help us understand the consequences of the proxy disclosure rule."

Undeterred, the SEC did its own research on how many pages a typical proxy-disclosure report would contain and found that it would be only a fraction of the tomes that the ICI publicized, the commissioner said.

Roy Weitz, a mutual fund shareholder advocate who publishes, called the Fidelity/Vanguard editorial and ICI's media appeal "a hopeless move. I can understand arguing extreme cases, but I don't think anyone is proposing a paper report."

"This is a new era of corporate governance and accountability. We are not yet finished," one of the commissioners said.

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