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U.S. Securities and Exchange Commission

SEC Staff Releases Report
on Mutual Fund Fees



Washington, D.C., January 10, 2001 – The staff of the Commission's Division of Investment Management today released a report entitled "Report of the Division of Investment Management on Mutual Fund Fees and Expenses," which presents the results of a study of trends in mutual fund fees. The report describes the legal framework with respect to mutual fund fees, analyzes how fees have changed over time, identifies factors that may influence the current level of fees, and recommends initiatives that are designed to improve the corporate governance structure for the oversight of fund fees and the disclosure that investors receive regarding fees.

Paul Roye, Director of the SEC's Division of Investment Management, said, "We conducted our study of fees in light of the significant growth of the mutual fund industry and Americans' increasing reliance on mutual funds to finance retirement, housing, and their children's education. Our goal is to provide objective data describing trends in mutual fund fees that may be useful to Congress and the Commission in overseeing the mutual fund industry, and to others who are focusing on the effect of mutual fund fees on investor returns. We hope that the report will contribute to the public dialog about mutual fund fees, and thereby help to educate investors on the impact that fees have on their investment returns."

In addition to describing trends in mutual fund fees and factors that may influence the current level of fees, the report addresses a recommendation by the General Accounting Office to require disclosure of the dollar amount of fund fees paid indirectly by investors. The GAO made the recommendation in a report on mutual fund fees dated June 2000 that was prepared at the request of Representative Michael G. Oxley, then Chairman of the House Subcommittee on Finance and Hazardous Materials, and Representative John D. Dingell, the ranking member of the House Committee on Commerce. The staff of the Division of Investment Management agrees with the GAO that investors need clear and understandable information about the fees that they pay, and that the fund industry and the Commission should encourage fund shareholders to pay greater attention to fees and expenses. The report recommends that the Commission consider requiring that the dollar amount of actual fees paid by investors would be disclosed in semi-annual and annual shareholder reports. The staff believes that this approach would enable investors to not only compare the expenses of funds, but also to evaluate the fee information that would be contained in the reports to shareholders alongside other key information about the fund's operating results.

The text of the report is available on the Commission's website at at http://www.sec.gov/news/studies/feestudy.htm. In addition, a fact sheet that briefly summarizes the staff's findings and recommendations is available on the website shortly, or upon request. For more information about the report, please contact Barry Miller at (202) 942-0663 or Paul Goldman at (202) 942-0510.

Additional Materials Available on This Topic

Report on Mutual Fund Fees and Expenses

Fact sheet on the Report