Your Independent Fund Director and You

On a related note, boards would be well-served appointing an independent director as chairman -- which is now the case at one-third of all fund boards.

Lipper's Kiel also suggests greater transparency in the voting process at boards. "If the voting records were published in a fund's statement of information, personalizing the directors' decisions would make them think a little bit more about how it would appear." Kiel frets, however, that turning the job into an extremely transparent exercise might narrow the pool -- and that it's hard to get individual investors to port over reams of pages about fund governance and voting records. That may be true -- but big institutional investors might pay closer attention.

Lastly, Bogle suggests giving the fund chairman a small staff to help collect more information "would be a major improvement."

What Should Directors Be Focusing On?

The hot-button issues facing directors currently are clearly late trading, market-timing and fund pricing and distribution issues.

The rise and increasing importance of intermediaries such as Security Trust, the trade-execution firm and trustee that allegedly helped Canary late trade funds "under the radar" -- without the funds' knowledge -- "is an issue that has to be addressed on an industry basis and a regulatory basis," said Barbash.

"The SEC has to come to resolution on how funds are sold. When salesmen have different incentives for selling funds, is that made known to investors? That's something that's been crying for attention for some time," Barbash said. Barbash also said soft-dollar arrangements between funds and brokers need to be addressed, because they don't "project the securities industry or the investment management firms in the best light."

These are issues boards should examine, as will legislators and regulators. Meanwhile, directors would also be well-served paying closer attention to three vital areas: fees, fees and fees.