WASHINGTON – Mutual fund companies and investment advisors may think that they have taken steps to deal with the rapidly approaching Securities and Exchange Commission (SEC) deadline of Aug. 6 for proxy vote reporting, but many firms have installed what are at best “stopgap measures” that are unlikely to prove adequate to the task in the coming months. This according to the Investor Responsibility Research Center (IRRC) and BISYS Group, Inc., a leading provider of back office solutions to the financial service industry. The two firms cautioned that many of the 6,000 U.S. investment advisors and their 10,000 mutual funds may be “underprepared” to deal with full range of compliance and tracking issues that will arise from the SEC rule requirement. “While few registered management investment companies will totally fail to meet the SEC deadline, we believe that a significant number will find that their `solutions’ break down when subjected to the real-world test of what the SEC is asking for here,” said Carol Bowie, IRRC director of corporate governance service. The new SEC rule requires registered management investment companies to disclose proxy voting policies & procedures as well as proxy votes. The fund must inform shareholders that its voting policy is available on the SEC Web site, as well as being available through the fund company upon request at no charge or on the fund’s Web site. Additionally, proxy voting records must be provided to shareholders upon request or via fund’s web site. Votes must be disclosed once per year on August 31, for votes cast in 12 months prior to June 30 of that year. The first filing must be no later than August 31, 2004. For each filing, the fund must include: name, ticker, and CUSIP of issuer of security; shareholder meeting date; a “brief” identification of matter voted on; whether the resolution proponent was management or a shareholder; whether the fund cast a vote on the matter; how the vote was cast (“for,” “against,” “abstain,” and “for” or “withhold” on election of directors) and whether vote cast was for or against management recommendation. The new SEC rule has an advantage because it has resulted in making “voting a higher profile activity than it has been in the investment management industry,” said George Martinez, BISYS fund services senior vice president. “Historically, the mutual fund industry has not had to track its voting in anything approaching the manner it will be now. For some big players, this could actually end up being a reputational issue. Martinez added “you don’t want to fall short of total compliance, particularly on an SEC rule like this, that actually ties in to the current volatile investor sentiments when it may be the wrong message to send.” [email protected]

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