REMARKS OF CHAIRMAN LEVITT MEDIA BRIEFING ON MUTUAL FUND COST CALCULATOR APRIL 6, 1999 Good morning and thank you for joining us. Today the Commission has good news for people who invest in mutual funds. Thanks to the hard work of many here at the Commission, I am pleased to present a significant new Internet-based tool that will allow investors to understand and compare the costs of investing in different mutual funds. This new tool is called the Mutual Fund Cost Calculator and is available now on the SEC website at . Mutual funds hold a staggering amount of investor assets -- more than five and a half trillion dollars -- up from over $1 trillion in just 1990. This is money that millions of Americans count on to retire comfortably, to send their children to college, and to realize the American dream. For some time, though, I have been concerned that the financial literacy of Americans has not kept pace with the growth of fund investments. I especially worry that investors do not understand the costs they pay for their mutual funds -- and how those costs affect the amounts they will have in retirement or for their children's educations. Our own research shows that less than half of mutual fund investors know that fund expenses are deducted on an ongoing basis. Only 8 percent say they completely understand the expenses that their funds charge. These figures and other findings demonstrate how much education still needs to be done and how the Cost Calculator can help. The Cost Calculator takes some of the mystery out of mutual funds by enabling investors to estimate and compare costs. And, it lets investors see how costs add up in dollars and cents over time. Like unit pricing in supermarkets, which lets consumers view the price per ounce of products that come in different sizes, the Cost Calculator will allow investors to understand the true cost of owning a particular fund, without being confused by the fund's packaging. It will help us close the gap between the knowledge fund investors have and the knowledge they need. The Cost Calculator, however, is meant to be a beginning and not an end of efforts to help investors understand and compare fund costs. My hope is that it will spur the fund industry to use its considerable creativity, ingenuity and resources to come up with better ways to explain fund costs to investors and better tools to help investors compare fund costs. The true measure of our success will be the extent to which our efforts are imitated and improved upon. Let me turn to Paul Roye, Director of our Division of Investment Management, who will now tell you more about the Cost Calculator. Nancy Smith, Director of the Commission's Office of Investor Education and Assistance, and Erik Sirri, the Commission's Chief Economist and the driving forces behind the Cost Calculator, will demonstrate how the Calculator works. Thank you.