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To: Terry Rose who wrote (11734)	5/16/1998 12:39:00 AM
From: PaulM	Respond to of 116836

500 Hundred Dead in Jakarta Chaos smh.com.au

To: Terry Rose who wrote (11734)	5/16/1998 10:27:00 AM
From: Alex	Respond to of 116836

SEC's Levitt Warns The Mutual Fund Industry JEFF YASTINE: The mutual fund industry got a tough warning from Wall Street's top regulator today. SEC Chairman Arthur Levitt told mutual fund executives they may be setting themselves up to disappoint millions of investors. That's because they're focusing so much on the stock market's strong returns. Darren Gersh reports. DARREN GERSH, NIGHTLY BUSINESS REPORT, CORRESPONDENT: It was a classic case of Washington jawboning. The Securities and Exchange Commission chairman challenging industry executives to do a better job warning investors about the risks and costs of investing in mutual funds. ARTHUR LEVITT, CHAIRMAN, SEC: I read the ads and I see nothing but performance, performance, performance. Why not outline clearly the impact of expenses or the nature of risks? GERSH: A recent NIGHTLY BUSINESS REPORT poll of mutual fund investors supports Levitt's concerns. 51 percent of investors considered performance the most helpful information when deciding to buy a fund. Just 3-1/2 percent considered the expense ratio the most helpful information. But as Levitt pointed out today, expenses matter a great deal. Over 20 years a 1 percent annual fee reduces the final value of an investment by 17 percent. Industry experts point out mutual fund fees are fully disclosed and the most recent data shows they are flat or declining by a slight margin. JEFFREY LYONS, SR. V.P., MUTUAL FUND MKT., CHARLES SCHWAB: I really don't think that these are necessarily too high. But it's important that people really understand what they are paying for, and what they are getting in return for that. GERSH: Levitt warned the industry should also do more to prepare investors for a market downturn. Industry executives say, weighing the appropriate level of risk for an investor is a key part of a broker's job. LAURIE HESSLEIN, EXECUTIVE VP, SALOMON SMITH BARNEY: We don't send out big bold letters saying, you know, "RISK BEWARE," because no one is going to want to invest. I mean, we have to at least be sensitive to what the opportunities are and certainly what the risk is on the other side. GERSH: Levitt doesn't believe the SEC should tell mutual funds how much to charge investors. But he clearly wants the industry to talk a great deal more to investors about expenses. Darren Gersh, NIGHTLY BUSINESS REPORT, Washington. Nightly Business Report transcripts are available on-line post-broadcast. The program is transcribed by FDCH. Updates may be posted at a later date. The views of our guests and commentators are their own and do not necessarily represent the views of Community Television Foundation of South Florida, Inc. Nightly Business Report, or WPBT. Information presented on Nightly Business Report is not and should not be considered as investment advice. (c)1998 Community Television Foundation of South Florida, Inc.