In an effort to help consumers better understand their own finances, Securities and Exchange Commission Chairman Arthur Levitt on Tuesday unveiled a tool they can use to compare the costs of competing mutual funds.

"Each and every investor should know what he or she is paying for in a mutual fund - plainly, simply, and in dollars and cents," Mr. Levitt said. "Only when investors know what they're paying can they shop for a fund that best matches their investment objectives."

Added to the SEC's Web site Tuesday was a page on which investors can plug in mutual fund data, including fees listed in prospectuses, documents most investors do not normally read. People also can enter personal information, such as how long they plan to hold the investment.

The "Mutual Fund Cost Calculator" then determines the total of sales costs and operating expenses and subtracts this from the value of the investment over a given period, based on an assumed rate of return.

These calculations let consumers decide whether they would earn more by investing in a no-load fund with high annual expenses or in a fund with a front-end charge but low annual expenses.

The mutual fund cost calculator is like comparing grocery prices on a per ounce, rather than per item, basis, Mr. Levitt said.

The fee calculator is available at the SEC Web site, www.sec.gov.

As more people depend on mutual funds for their retirement, the amount invested in them has jumped from $1 trillion in 1990 to more than $5.5 trillion today, Mr. Levitt said.

"I especially worry that investors do not seem to accurately understand the costs they pay for their mutual funds - and how those costs affect the amount they will have near retirement age," Mr. Levitt said.

According to the SEC, fewer than half of mutual fund investors know that fund expenses are deducted periodically, and only 8% say they totally understand the costs of their funds.

"A 1% difference in mutual fund costs may seem insignificant at first, but over time it can add up," said Nancy M. Smith, director of the SEC Office of Investor Education and Assistance. "You can save tens of thousands of dollars by using the cost calculator to comparison shop before you invest in a mutual fund."

However, the Investment Company Institute, a trade association for the mutual fund industry, questioned whether high fees were a problem for most consumers. More than three-quarters of all investments in equity funds are in those with lower than average costs, it said.

"This evidence speaks powerfully and indicates that many investors pay attention to the impact of fees on their fund investments," said institute president Matthew P. Fink. Still, the institute praised the SEC's effort to increase investor awareness.

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