Three U.S. Senators introduced new legislation last week aimed at reforming the $7.4 trillion mutual fund industry. The Mutual Fund Reform Act of 2004 would not only stamp out abusive trading practices but also overhaul the hidden fee structure imposed on shareholders.

Sponsored by Sen. Peter Fitzgerald (R-IL), Sen. Carl Levin (D-MI) and Sen. Susan Collins (R-ME), chairman of the Senate Governmental Affairs Committee, the Mutual Fund Reform Act of 2004 would require a total fund expense ratio to include portfolio transaction costs and rationalize 12b-1 fees by treating broker compensation as a shareholder expense.

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