Mutual funds should be required to give investors details about the brokerage commissions paid for buying and selling stocks in the financial tables in their annual reports, the Investment Company Institute suggested to the SEC. In a letter to the securities regulator, the Washington-based mutual fund trade group suggested trading costs be disclosed as a percentage of average net assets and as a percentage of the principal amount of the transactions. The industry trade association also suggested mutual funds be required to disclose their gross inflows and outflows of money as a percentage of average net assets, as well as give more details about the portfolio turnover rate. It also recommended the SEC require fund directors to approve their policies and procedures for monitoring brokerage and portfolio costs, and receive periodic reports of the costs.
The industry trade group was responding to the SEC's requests for ideas on helping mutual fund investors develop a better idea of the impact of transaction costs on performance.