1.5 United States Congress passes legislation to reform the mutual fund industry On 19 November 2003, the United States Congress approved the Mutual Funds Integrity and Fee Transparency Act, H.R. 2420, which will benefit America’s 95 million mutual fund investors by increasing transparency of fund fees and costs, by strengthening corporate governance and management integrity, and by establishing measures to prevent fraudulent trading practices. H.R. 2420 would: (a) Provide investors with more information about fees: The Bill would direct the SEC to issue rules requiring funds to provide investors with improved disclosure of the following: Estimated operating expenses, in dollar amounts, on a  hypothetical $1,000 investment. Portfolio turnover in a way that facilitates comparison  among funds. Soft dollar arrangements.  Directed brokerage arrangements used to obtain fund  distribution. Revenue sharing arrangements used to obtain fund distribution.  (b) Increase transparency: The Bill would give investors access to enhanced information about fund internal operations and potential conflicts of interest associated with mutual fund sales and internal workings to help mitigate those conflicts and help investors make informed investment decisions. Provisions included in the Bill would: Codify SEC rules requiring the disclosure of votes cast on behalf  of shareholders as well as the policies and procedures for proxy voting. Require each fund to have a code of ethics, which would have to  be disclosed, as well as any waivers or violations of such codes. Require that funds disclose the structure of portfolio manager  compensation. Require fund managers to disclose any holdings they have in the  funds they manage. Require that brokers disclose to investors whether they have  received extra financial incentives to sell a particular fund or class of shares.
1.5 United States Congress passes legislation to reform the mutual fund industry On 19 November 2003, the United States Congress approved the Mutual Funds Integrity and Fee Transparency Act, H.R. 2420, which will benefit America’s 95 million mutual fund investors by increasing transparency of fund fees and costs, by strengthening corporate governance and management integrity, and by establishing measures to prevent fraudulent trading practices. H.R. 2420 would: (a) Provide investors with more information about fees: The Bill would direct the SEC to issue rules requiring funds to provide investors with improved disclosure of the following:  Estimated operating expenses, in dollar amounts, on a hypothetical $1,000 investment.  Portfolio turnover in a way that facilitates comparison among funds.  Soft dollar arrangements.  Directed brokerage arrangements used to obtain fund distribution.  Revenue sharing arrangements used to obtain fund distribution. (b) Increase transparency: The Bill would give investors access to enhanced information about fund internal operations and potential conflicts of interest associated with mutual fund sales and internal workings to help mitigate those conflicts and help investors make informed investment decisions. Provisions included in the Bill would:  Codify SEC rules requiring the disclosure of votes cast on behalf of shareholders as well as the policies and procedures for proxy voting.  Require each fund to have a code of ethics, which would have to be disclosed, as well as any waivers or violations of such codes.  Require that funds disclose the structure of portfolio manager compensation.  Require fund managers to disclose any holdings they have in the funds they manage.  Require that brokers disclose to investors whether they have received extra financial incentives to sell a particular fund or class of shares.