(July 6 – 17:00 ET) – The U.S. General Accounting Office today delivered a report on mutual fund fees to the House Chairman of the Subcommittee on Finance and Hazardous Materials and the Ranking Member of the Committee on Commerce.
The report, entitled Additional Disclosure Could Encourage Price Competition, reviewed trends in mutual fund advisors’ costs and profitability, trends in mutual fund fees, how mutual funds compete, how their fees are disclosed, and the responsibilities that mutual fund directors have regarding fees.
The report recommends that the Securities and Exchange Commission and NASD require that quarterly account statements sent to investors include information on the specific dollar amount of each investor’s share of operating expenses charged by the fund. It recommends that the SEC should also consider the costs and benefits of various ways of making these disclosures.
SEC chairman Arthur Levitt said, “The report provides a comprehensive analysis of mutual fund fees and the market forces that impact those fees. I commend the GAO for this important effort. Just as our investor education and disclosure efforts are designed to provide mutual fund investors the tools they need to make wise investment choices, the GAO’s report also will contribute to the public dialogue on this important issue.”
The SEC also recently proposed a rule requiring mutual funds to report standardized investment returns on an after-tax basis in prospectuses and shareholder reports. It is now also considering a rule proposal designed to strengthen the role of mutual fund directors and to assist them as watchdogs for the interests of shareholders.
-IE Staff