As the window for compliance with new Securities and Exchange Commission rules draws to a close, fund companies are gearing up for the first stage, while maintaining their opposition to the second.

The new SEC rule --

approved in January, effective Aug. 6 -- requires that fund companies disclose their proxy voting policies, as well as the actual votes. The fund must inform shareholders that its voting policy is available on the

SEC Web site, as well as through the fund company itself, free of charge.

Beginning in August 2004, the specifics of all proxy voting records must be disclosed annually on Aug. 31 and posted on the fund's Web site or available upon request. The records must include a brief summary of the matter voted on; whether the resolution proponent was management or a shareholder; whether the fund cast a vote on the matter and, if so, how it was cast; and whether that vote was for or against management recommendation.

Many large fund companies had bellyached that the

stricter-than-expected rules were far too onerous and unnecessary to boot.

One argument, along the lines of "a little knowledge is a dangerous thing," is not unconvincing. How a fund votes in the thousands of proxy contests each year is arguably not where investors should pour their research energy.


, for instance, votes in more than 5,000 proxy contests a year. The largest fund family also posts its guidelines for proxy voting on

its site, noting its policy against repricing stock options without shareholder approval, as well as other issues of executive compensation. Beyond that, though, the company doesn't think greater disclosure will help -- and could very likely hurt -- shareholders.

But other more spurious arguments, such as "that level of disclosure would be prohibitively expensive," ring hollow, says Kunal Kapoor, associate director of fund analysis for Morningstar. "Any argument centered around cost is unfounded," he says. "Fund companies must be keeping track of these votes already; disclosing that information shouldn't cost much."

TheStreet Recommends

For the most part, fund companies large and small are minimizing their grumbling about the first stage of compliance. "We've posted our guidelines on proxy voting for years," says John Woerth, a spokesman for



Calvert Funds

, the largest socially responsible fund family, has gone a step further. In revisiting their guidelines as a result of the SEC rule, Calvert has strengthened many of its policies and created what it calls a "model" guideline for proxy voting. The firm has

posted its guidelines, encouraging other fund families to adopt a similar stance on corporate governance issues.

"In the aftermath of the SEC rule change, but also in the aftermath of two years of corporate scandals, we have revised our proxy contest guidelines," says Joe Keefe, Calvert's senior adviser for strategic social policy. "We've put ours out there as a model, saying to other fund companies 'take it if you want it.' We've addressed a lot of issues that have historically been ignored by most mutual funds."

The changes encompass stricter corporate governance expectations regarding the companies Calvert invests in. Where Calvert always had a policy of opposing board of director slates that weren't independent or didn't have enough women or people of color, the new guidelines dictate that Calvert oppose any board that doesn't have such requirements in its charter. Directors are also expected to go to a requisite number of board and committee meetings. "


had a majority of independent directors," Keefe notes, "but none of them did anything."

Ultimately, though, shareholder votes are little more than a courtesy. Directors and executives are not beholden to implement any changes as a result of a vote. Which is why Calvert instituted a new guideline -- to vote against a slate of directors that failed to act on the results of previous shareholder votes.

Funds are not required to meet a certain standard in creating and publishing their voting guidelines -- simply that they have them and shareholders can easily access them. But while funds either grudgingly comply or boast that they're already in compliance, the real battle will continue throughout the year as funds focus on complying with the requirement to publish their individual voting record.

"There's always going to be opposition from the fund industry regarding regulation," Kapoor says. "I fully expect intense lobbying regarding the disclosure to be required for next year. That's the real litmus test."