The Honorable James F. Hinchman
Acting Comptroller General
General Accounting Office
441 G Street, N.W.
Washington, D.C. 20548

Dear Mr. Hinchman:

In September 1995, at my request, GAO reported on the disclosure and sales practices of banks and thrifts with respect to mutual funds, and evaluated the framework for regulation and oversight of bank and thrift mutual fund operations (Bank Mutual Funds: Sales Practices and Regulatory Issues, GAO/GGD-95-210, September 27, 1995). Last summer, GAO submitted a report on its self-initiated review of the Securities and Exchange Commission's regulation and oversight of investment companies (Mutual Funds: SEC Adjusted Its Oversight To Rapid Industry Growth, GAO/GGD-97-67, May 28, 1997).

However, neither report looked at the burgeoning costs being borne by mutual fund investors, how fees are set, whether these costs are reasonable, whether they are adequately disclosed to investors and understood by them, the impact of fees and other charges on performance and net return, and, ultimately, whether mutual funds truly are being run for the benefit of their shareholders.

This Committee's Subcommittee on Finance and Hazardous Materials held a hearing today on improving price competition for mutual funds and at which we heard conflicting testimony on several key issues. I am transmitting copies of the testimony and asking that GAO take a comprehensive look at mutual fund fees and report back to Congress with your findings and recommendations. Given the number of U.S. households that own shares in mutual funds for retirement savings and otherwise, and the projected continued growth and importance of the mutual fund industry, I ask that this request be given appropriate priority.

 Thank you for your cooperation and attention to this matter.

Sincerely,

JOHN D. DINGELL
RANKING MEMBER

Enclosures

cc: The Honorable Tom Bliley
The Honorable Michael Oxley
The Honorable Thomas J. Manton

Back to the Public Record Home Page