Washington (Dec. 12, 2002) -- The Securities and Exchange Commission proposed a new rule Wednesday which would force mutual funds to be more open about their expenses.
The commission wants funds to detail their expenses in dollars and cents, rather than as a percentage of assets, which is how fund fees are currently disclosed to investors.
Under the proposed rule, a fund’s shareholder report would be required to include the cost of a $10,000 investment based on the fund’s actual expenses and returns, as well as an assumed return of 5 percent per year. The first number would enable shareholders to estimate actual costs, while the second would give them a basis for comparison of expenses at different funds.
The SEC also wants funds to disclose their complete portfolio holdings four times per year in SEC filings, an increase from the twice-yearly practice now mandated by the agency.
-- Electronic Accountant Newswire staff
