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Mutual Funds Mutual funds offer the investor immediate diversification into carefully selected and managed securities. An investment program can be started for a small amount of money (typically $500-$1,000) and subsequent purchases can be as small as $50. Automatic reinvesting of capital gains and dividends will speed up the growth of the investment. A mutual fund is a professionally managed, diversified portfolio of securities, such as stocks or bonds. The great appeal of mutual funds is that the investor shoulders none of the investment decisions or timing decisions required by individual stock investing. Mutual fund portfolio managers are trained in finance and have years of experience managing portfolios. Many funds have in-house analysts and research staffs to review financial and economic data and to select securities that represent the best values for capital appreciation or income. A diversified portfolio of stocks or bonds reduces risk. Financial research has shown, for example, that 60 percent of the time a stock's price moves in tandem with the overall market. That movement represents market risk. Twenty to thirty percent of the time, a security's price is determined by specific information about a company and/or its industry's outlook. Luck is the final factor that can influence a stock's price. Portfolio managers have little control over market risk or the vagaries of the financial markets. If the stock market is moving higher, portfolios will generally register gains. Diversification, however, will protect investors against non-market risk. Most well-diversified mutual funds with asset values of more than $200 million hold from 50 to several hundred issues. As a result, by holding a large number of issues and maintaining a portfolio that tracks the broad market, a few poorly performing issues should not hurt the overall performance of the fund. The majority of investment companies have a group of mutual funds with different investment objectives from which to choose, and over the past two decades the number of mutual funds to choose from has increased dramatically. Generally, investors have the option to make a telephone call and switch out of their existing funds into other funds as their financial needs or investment conditions change. (Switching some funds may incur a charge.) Once an investor account has been established, future investments can be made by telephone directives. In addition, mutual funds represent a low cost way to invest in the financial markets, as opposed to frequent trading on the major exchanges. Management fees for running the portfolio are usually 0.5 percent or less, depending on the total assets of the fund. Fund performance can be tracked easily, and historic information is readily available. Mutual funds can be purchased with or without sales charges. These are referred to as "load" and "no-load" funds respectively. No-load funds have no sales representatives, and, therefore, no commissions need to be paid. (This does not mean, however, that there will never be any fees charged to the investor on a long-term basis.) An investor must carefully choose a fund; often a load fund may outperform a no-load fund, thus equalizing any initial sales charges paid. There is no guarantee that either a load or a no-load fund will outperform the other during an extended investment cycle. Investors should not expect to get rich quickly from mutual fund investments, nor should they experience high losses. Overall, however, the opportunities for the individual investor may be greater with mutual funds than with individual stock or bond issues. Long-term planning is the key and, as with other investments, patience is a virtue. Family of Funds Many mutual funds have a broad spectrum of funds to meet the needs and temperaments of various investors. A typical family of funds might include the following: MONEY MARKET FUNDS SECTOR FUNDS - Invest in short-term money - Concentrate on a particular market instruments. area of the economy. - Yields fluctuate daily. - Typical areas include: - Good during periods of technology, health, energy, high interest rates. utilities, precious metals, etc. MUNICIPAL BONDS FUNDS - Invest only in Muni. Bonds AGGRESSIVE GROWTH FUNDS - Provide TAX-FREE Income - Very volatile. - May be state tax exempt - Invest in high- performing - May be subject to Alter- stocks. native Minimum Tax - High risk/high return potential. BONDS FUNDS - Invest in debt-type GROWTH FUNDS instruments. - Invest mainly for capital - Relatively high yield. growth. - Market value fluctuates - Vary greatly - read offering inversely to interest prospectus to establish rates. objectives of fund. INCOME FUNDS GROWTH & INCOME FUNDS - Seek maximum income. - Also called Balanced Funds. - Invest in bonds, - Seek capital appreciation preferred or high yield and income from dividends stocks. or fixed income investments. Exchange Privilege Exchange from one fund to another may be allowed at any time for a nominal fee (usually $5) and no commission charge. There will be tax consequences at the time of exchange if there is a profit or a loss. Load Funds Can Be a Bargain When it comes to investing in mutual funds, one of the choices investors must make is whether to select a "load fund" or a "no-load fund." To make the right decision, it's important to understand the differences between the two types of funds. A load mutual fund charges an up-front sales fee, or load, when you buy it. A portion of the sales charge goes to the broker/dealer who represents the fund. For that fee, the broker/dealer explains the fund and is obligated to see that it meets your objectives. The load further obligates the broker/dealer to continue servicing your account for as long as you own the fund. No-load funds, on the other hand, charge no up-front sales fee. This can be an enticing feature for many investors. When comparing mutual fund costs, however, it is not only important to consider the up-front costs of buying the fund, but also to understand the fund's ongoing annual expenses. For example, rather than paying registered investment representatives to offer their shares and service your account, no-load funds offer their shares through ongoing advertising. One example of this was the 1993 Forbes Mutual Fund edition, in which about 83 percent of the mutual fund advertisements were bought by no-load funds. The cost of all that advertising is paid by the no-load fund before any of the earnings get to you. To illustrate this, let's look at a $100,000 investment in two hypothetical funds, each compounding at the same 12 percent gross annual return (Table 1). Fund A is a load fund with a 3.5 percent up-front charge and annual expenses of 0.6 percent. Fund B is a no-load fund with no up-front charge and annual expenses of 1.8 percent. The load fund charges $3,500 up front. However, because of lower ongoing expenses, the value of the load fund surpasses that of the no-load fund in four short years. After 20 years, Fund A is $138,407 ahead of Fund B. Kiplinger's Personal Finance Magazine summed up this example in an article that stated, "Front-end loads are a pittance when spread over many years." The debate over load and no-load funds will undoubtedly continue with valid arguments on both sides. As with any investment, however, it's up to you to make an informed decision before you write your check. TABLE 1 $100,000 Investment Fund A Fund B 3.5% Load No Load 12% Gross Annual Return 12% Gross Annual Return 0.6% Annual Fee 1.8% Annual Fee 11.4% Actual Annual Return 10.2% Actual Annual Return Start $96,500 $100,000 Year 1 107,501 110,200 Year 2 119,756 121,440 Year 3 133,408 133,827 Year 4 148,616 147,477 Year 5 165,559 162,520 Year 6 184,432 179,097 Year 7 205,458 197,365 Year 8 228,880 217,496 Year 9 254,972 239,681 Year 10 284,039 264,128 Year 15 487,309 429,263 Year 20 836,047 697,640 Chasing Winners Can Make You a Loser Serious investing is done with the future in mind; yet, some investors are tempted to look only at the current hot performers when picking stocks. After all, because we can't predict the future, going with today's best-performing investment may seem to make sense, right? Wrong. One way to illustrate the folly of this practice is by looking at what happens when you always follow last year's top-performing mutual fund. Let's assume that on Jan. 1, 1973, you invested $10,000 in the best-performing fund of 1972. On Jan. 1 for the next 20 years, you moved your investment to the best-performing fund of the previous year. Assuming all capital gains and dividends were reinvested, and allowing for all sales and redemption charges, Table 1 shows, year by year, what would have accumulated by switching to each year's top performer. By Dec. 31, 1992, your original $10,000 would have grown to $95,571. That's not a bad return, even considering these were good years for stocks. It even beat the market as a whole by about 10 percent. But what would have happened if you had made a one-time, $10,000 investment on Jan. 1, 1973, in a conservatively managed growth-and-income fund, and you let it compound undisturbed for the same 20-year period? The table shows the results of three such funds -- Fund A grew to $107,915, Fund B to $122,724 and Fund C to $126,109. All three outperformed the investor who switched to the best performer of each year. None of these three funds was ever recognized as the top performer in any of those 20 years. In fact, they seldom or never even made the top performance lists of financial publications that rate mutual funds annually. The secret of their success was to consistently aim for reasonable investment results, total return or a combination of growth and income. The examples show that consistent results without big surprises can put you ahead over the long haul. It beats trying to chase winners. TABLE 1 $10,000 Investment Moving $10,000 One-Time to Previous Year's Top Fund Investment in One Fund Year Fund A Fund B Fund C 1973 $8,501 $7,842 $8,417 $8,572 1974 8,729 6,435 7,076 7,091 1975 10,509 8,712 9,563 10,257 1976 15,396 11,290 12,838 13,457 1977 18,460 11,000 13,088 12,919 1978 23,555 12,616 14,748 13,937 1979 16,961 15,035 17,926 15,947 1980 27,256 18,227 22,471 19,716 1981 23,658 18,387 24,227 21,204 1982 40,426 24,597 31,504 28,564 1983 50,300 29,557 39,110 36,037 1984 38,653 31,528 41,594 39,100 1985 49,206 42,056 54,317 51,660 1986 80,759 51,197 64,392 63,283 1987 85,825 53,981 67,239 64,167 1988 77,661 61,180 75,879 75,496 1989 102,434 79,170 95,041 97,362 1990 67,402 79,710 93,499 93,601 1991 130,106 100,867 113,809 115,593 1992 95,571 107,915 122,724 126,109 Interesting Facts About Mutual Funds Mutual funds are a relatively straightforward investment; however, individual investors may not be aware of a lot of the interesting trivia concerning mutual funds. The Investment Company Institute (ICI), the Washington, D.C.-based voice of the mutual fund industry, recently sent out a list of interesting facts about mutual funds, including: * The term "mutual fund" is not synonymous with the stock market. The almost $2 trillion invested in mutual funds is almost evenly divided among stock, bond and money-market funds. * Contrary to popular belief, the "boom" in mutual funds did not begin in the 1990s. Rather, during the decade of the 1980s, fund assets increased from $95 billion to $1 trillion. * An increase in mutual fund assets is not the same as an increase in cash flow. For example, combined assets of stock and bond funds have increased by $776 billion since 1990. However, only $446 billion of that represents new investments. The remaining $330 billion comes from the earnings and appreciation (rising values) of existing stock and bond portfolios. * Most of the "new" money being invested into mutual funds is not from bank CDs or unsophisticated "savers" who have never invested. Recent studies indicate that most new mutual fund money is being invested by people who are already mutual fund shareholders. * There were no massive liquidations by stock mutual fund managers on Oct. 19, 1987, the day the stock market crashed more than 500 points. On that day, only 2 percent of stock fund assets were redeemed by shareholders. Two-thirds of those redemptions were taken from the funds' existing cash positions, which served as a buffer and prevented greater selling in a falling market. * Although mutual funds are not guaranteed or insured, they are heavily regulated under federal and state securities laws. No mutual funds have "collapsed" or "gone bankrupt" since the Investment Company Act was passed in 1940. * A substantial amount of mutual fund assets are in the form of municipal bond funds, which invest in the debt offerings of state and local governments. These funds play a vital role in paying for public services and infrastructure. * Of the total assets invested in mutual funds, about $390.5 billion is long-term money in retirement plans. * Factors contributing to the mutual fund industry's current success include the maturing of 77 million baby boomers, declining interest rates, the growth of defined contribution retirement plans, the massive refinancing of home mortgages and the large number of involuntary lump-sum distributions to participants in pension plans. * Mutual fund shareholders are not the "rich." The median household income of mutual fund shareholders is $50,000, meaning that one-half have incomes below that figure. Regulation of the Mutual Fund Industry The first mutual fund began in the United States in 1924, and in the years that followed, the demand for securities grew at an unprecedented rate. Then, in 1929, the U.S. stock market crashed, followed by a worldwide depression. These events signaled the need for federal control of securities, including mutual funds. Today, mutual funds are among the most strictly regulated investments under federal securities laws. They are regulated by five major statutes: The Securities Act of 1933. This act established a number of filing requirements for all mutual funds, including the filing of detailed registration statements with the Securities and Exchange Commission (SEC). It also requires funds to regularly disclose detailed information about their operations to the SEC, state securities boards and shareholders. Further, this disclosure must be uniform, providing the same information to all audiences. Under this act, funds also must provide potential investors with current prospectuses (updated annually) describing each fund's management, objectives, risks, investment policies and other essential data. The act also approved but limited all mutual fund advertising. The provisions of the act are still in effect. The Securities Exchange Act of 1934. This legislation regulates the purchase and sale of mutual fund shares. It subjects distributors to anti-fraud provisions that are monitored and enforced by the SEC and National Association of Securities Dealers (NASD). The Investment Advisers Act of 1940. This act regulates the activities of mutual fund advisers. Specifically, it focuses on self-dealing and conflicts of interest within mutual funds, and it guards against charging shareholders excessive fees. In 1992, the SEC prepared a 500-page document with recommendations for updating this act; some changes may be forthcoming. The Insider Trading and Securities Fraud Enforcement Act of 1988. This law requires investment advisers and broker/dealers to develop and enforce strict procedures to prevent insider trading. Insider trading occurs when people with access to information not available to the general public use that information for their own benefit. The act also expanded the SEC's authority to regulate insider trading. The Market Reform Act of 1990. This latest securities act gives the SEC authority to halt securities trading and/or restrict program trading, or automated computer trading, usually of huge blocks of securities. This law was brought about by the 500-point decline in the Dow Jones Industrial Average on October 19, 1987; its purpose is to prevent such drastic drops from occurring again. In addition to these federal laws, each state has its own securities regulations pertaining to mutual funds. Federal and state laws are all designed to ensure that mutual funds are operated and managed in an open, consistent way so that investors receive the information they need to make investment decisions. The first mutual fund began in the United States in 1924, and in the years that followed, the demand for securities grew at an unprecedented rate. Then, in 1929, the U.S. stock market crashed, followed by a worldwide depression. These events signaled the need for federal control of securities, including mutual funds. Today, mutual funds are among the most strictly regulated investments under federal securities laws. They are regulated by five major statutes: The Securities Act of 1933. This act established a number of filing requirements for all mutual funds, including the filing of detailed registration statements with the Securities and Exchange Commission (SEC). It also requires funds to regularly disclose detailed information about their operations to the SEC, state securities boards and shareholders. Further, this disclosure must be uniform, providing the same information to all audiences. Under this act, funds also must provide potential investors with current prospectuses (updated annually) describing each fund's management, objectives, risks, investment policies and other essential data. The act also approved but limited all mutual fund advertising. The provisions of the act are still in effect. The Securities Exchange Act of 1934. This legislation regulates the purchase and sale of mutual fund shares. It subjects distributors to anti-fraud provisions that are monitored and enforced by the SEC and National Association of Securities Dealers (NASD). The Investment Advisers Act of 1940. This act regulates the activities of mutual fund advisers. Specifically, it focuses on self-dealing and conflicts of interest within mutual funds, and it guards against charging shareholders excessive fees. In 1992, the SEC prepared a 500-page document with recommendations for updating this act; some changes may be forthcoming. The Insider Trading and Securities Fraud Enforcement Act of 1988. This law requires investment advisers and broker/dealers to develop and enforce strict procedures to prevent insider trading. Insider trading occurs when people with access to information not available to the general public use that information for their own benefit. The act also expanded the SEC's authority to regulate insider trading. The Market Reform Act of 1990. This latest securities act gives the SEC authority to halt securities trading and/or restrict program trading, or automated computer trading, usually of huge blocks of securities. This law was brought about by the 500-point decline in the Dow Jones Industrial Average on October 19, 1987; its purpose is to prevent such drastic drops from occurring again. In addition to these federal laws, each state has its own securities regulations pertaining to mutual funds. Federal and state laws are all designed to ensure that mutual funds are operated and managed in an open, consistent way so that investors receive the information they need to make investment decisions. Mutual Funds Offer Many Convenient Services In addition to the benefit of professional money management, mutual funds offer a variety of services, usually at no cost to their shareholders. These services are outlined in the fund's prospectus and can mean lifelong investing without ever having to sell your fund or move from the mutual fund group. Of course, to fully benefit, you must understand and properly utilize these services. One common service is the exchange privilege. If your financial circumstances change and you want to adjust your portfolio, the exchange privilege allows you to easily move your mutual fund investment to another fund managed by the same "family of funds." Because of this service, it is important to examine all the funds offered by a mutual fund family before you invest. Another shareholder service, called automatic reinvestment, allows all dividends and capital gains to be reinvested automatically, providing additional growth potential through compounding. Reinvestment also can be used to make automatic monthly investments by authorizing the fund to draw a specified sum from your checking account each month. To help with record-keeping, mutual funds provide a confirmation statement every time activity occurs within your account. At the end of the year, funds also provide 1099-DIVs, which show the amount and tax status of distributions paid during the year. And, to eliminate the problem of lost or destroyed certificates, mutual funds can have certificates held by a custodian bank at no cost. Most mutual funds also offer IRS-approved, trusteed prototype retirement plans for Individual Retirement Accounts (IRAs), Simplified Employee Pension Plans (SEPs), retirement plans for employees of non-profit organizations (403(b)s), and retirement plans for the self-employed. Load funds -- funds that charge up-front fees -- often offer discounts for larger investments, whether made at one time or over a period of time. Discounts typically apply to investments of $10,000 or more in one fund or a combination of funds within a family. The "right of accumulation" service allows you to qualify for the discount by adding any new purchase within a family to the value of your existing shares. Or, if you plan to make a sizable deposit over a 13-month period, you can sign a statement of intention, without obligation, entitling you to the maximum discount applicable to the total amount you plan to invest. Mutual funds offer a wide range of services in addition to professional money management. If you own mutual funds now or plan to invest in them in the future, ask your representative about shareholder services. They can offer substantial benefits at a price you can't refuse. What You Should Know About Systematic Withdrawal Systematic withdrawal is a service offered by many mutual funds. At your request, the fund will send you regular checks for a specified amount. This can be a real benefit to individuals who need monthly checks to help meet living expenses. Most mutual funds with a growth-and-income objective pay quarterly dividends and annual capital gain distributions. With systematic withdrawal, you can have part of the total return (dividends plus capital gains) distributed to you each month. For example, assume a fund has historically averaged a total annual return of 12 percent, consisting of a 4 percent average annual dividend and an 8 percent average annual gain. You set up an annual systematic withdrawal of 10 percent, leaving your principal undisturbed as well as adding about 2 percent a year to its value. As long as the fund continues to earn 12 percent or more, your investment is working as planned. However, what if the mutual fund has an unusually bad year? Suppose the fund is able to maintain its regular 4 percent dividend, but due to a declining market, there are no capital gains. If you continue to withdraw the same amount, the fund will be required to return part of your principal, and eventually you could run out of money. To use systematic withdrawal properly, think of your fund as a bucket full of water. At the bottom is a faucet from which you regularly draw a cup of water. As long you replace this with as much or more water than you withdraw, you will continue to have plenty of water. But if you continue to withdraw more than you replace, your water level will decrease, and your bucket may eventually run dry. The same happens if you systematically withdraw more than your fund is earning -- your principal will decrease, and your investment may eventually run dry. Does this mean you should avoid systematic withdrawal? Not at all. It just means that flexibility is the key. If total return decreases, decrease your withdrawal. By taking smaller withdrawals, you can monitor your investments until the principal begins to grow and builds a cushion. Or you can delay beginning withdrawals until the initial investment has grown. Systematic withdrawal from carefully selected mutual funds can be an excellent way to receive regular income and still allow your investments to grow. But it requires understanding, monitoring and the flexibility to adjust to economic changes. Mutual Funds May Not Be What You Thought You Bought Did you know that your U.S. government bond fund could invest as much as 35% of its assets in junk bonds? Or that your global equity portfolio includes U.S. stocks? A mutual fund can use a certain name if, under normal market conditions, at least 65% of its assets are invested in that category, according to Securities and Exchange Commission guidelines. For funds that call themselves tax-exempt, the minimum mix is 80% tax-exempt and 20% other assets. If a fund uses the term municipal, the requirement drops back down to 65%. Confused? How about the terms "global" and "international"? The dictionary defines global as involving the world and international as reaching beyond national boundaries. So it should come as no surprise to the literally minded that global funds include U.S. stocks or bonds, while international funds don't? But many people don't realize this. It is not the intention of the SEC to give license for funds to mislead investors, but to allow those funds the ability to have good management. An investor can find out generally what a fund can invest in by consulting its prospectus, and can discover exactly what a mutual fund owns at a particular point in time by consulting its annual or semiannual report. The report will list all the holdings as of a certain date, including complicated assets like derivative securities and forward currency positions that might never get mentioned in the fund's prospectus. If you want to find out what the fund is investing in, the annual report is critical. Such a snapshot report is not perfect, but it gives investors a better understanding of a fund. If you want a current portfolio mix, call the fund sponsor to ask for a fax of the fund's current portfolio. Finding out exactly what a mutual fund owns as well as what it could buy is crucial information for investors. It strikes at the heart of what is happening with your money and what could happen to the money, including the risks that are taken. The prospectus, often a drab legalistic document, lays out the parameters of the fund's investment policies, objectives and possible practices, including most expenses, but it is not nearly the whole story. The prospectus establishes the rules of the game, but it doesn't necessarily establish what the practice is. Many funds have elastic investment objectives. These can be wild card risks. Under SEC rules that took effect July 1, 1993, new prospectuses will be more informative, including, for example, the name of the portfolio manager. Total fund returns for the last 10 years, a discussion of the factors and strategies that affected the prior year's performance, and a chart illustrating how a $10,000 investment would have fared compared to a broad-based market index will also be included in the new prospectus or annual report. The new guidelines don't require funds to list winners and losers among their investments, or how the use of futures contracts, derivatives or forward currency contracts affect performance. But some mutual funds may choose to divulge such information in keeping with the spirit of the guidelines. One piece of information they won't have to disclose in the prospectus is an asset class that comprises less than 5% of the total portfolio. That's the current rule and it isn't about to change. While the performance of 5% of a fund's assets generally does not have a dramatic impact on the performance of the overall fund, its effect can be multiplied substantially if the asset is used for leverage. Some extraordinarily powerful residual bond can create as much as four times the leverage of a traditional bond. If interest rates rise, the value of the residual bond -- a popular derivative also known as an inverse floater -- will drop almost four times as much as a regular bond. The investor may discover in the fund's Statement of Additional Information that the fund can invest in such a complicated product but the disclosure won't be easy to find. this document is usually lengthier and more turgid than the prospectus. Another piece of information not required in a mutual fund prospectus or in the annual report is the cost of brokerage commissions, which could add up in funds with a hefty turnover rate. Given current low interest rates and low inflation, investors have to be attuned to every cost a fund incurs. They have to be conscious of how much it costs to get their money managed. If a fund has 2% of assets in brokerage costs, that may adversely affect performance -- or it may not if the portfolio manager is skilled at taking short term profits. The issue of disclosure about mutual fund activities is probably as old as the business itself. But recently it has received more attention because of the new SEC rules and other developments. In mid-1993 the New York City Department of Consumer Affairs charged the Dreyfus Corp. and the Franklin Advisers for engaging in deceptive advertising. Dreyfus was cited for claiming in a brochure that its Growth and Income Fund does not invest in junk bonds even though its prospectus states that up to 35% of its assets may be invested in convertible debt securities deemed to be junk bonds. This is the portion of the fund left over after 65% is invested in securities that resemble the name of the fund. Franklin was cited for claiming in an ad that its Valuemark II fund guaranteed retirement income for life even though the fund pays an annuity issued by an insurance company that is only as secure as the insurance company itself. Index Funds -- And Why You Don't Want One Mutual fund companies now offer index mutual funds designed to mirror the make-up and performance of a particular stock market index. Although the Standard & Poor's (S&P) 500 is the most popular model for index funds, other indices are used, with over 60 index mutual funds offered. Index mutual funds tend to have lower management fees than other funds for two reasons: 1) Since the fund invests only in stocks represented in the index, management does not need to analyze or select stocks. 2) Index funds tend to have lower turnover, resulting in lower transaction costs and minimal capital gains distributions to investors. Index funds are often almost fully invested in the stock market, keeping very low cash reserves. There is no guarantee that an index fund's performance will mimic the performance of the actual index. Investing in an index mutual fund requires careful analysis. Index funds are modeled after different indices, and it is important to decide which is appropriate for your investment objectives. Different funds modeled after the same index will experience different results and will charge different management fees and sales charges, making it important to carefully review the performance of a fund you are interested in. Pay particularly close attention to the investment strategies of the fund. Some index funds will buy stocks in all companies represented in the index, in proportion to each stock's market capitalization in the index. Other funds purchase all of the stocks in the index but in different proportions, while others will purchase only some of the stocks in the index. With all these variations, the idea of buying an index fund isn't as pure and simple as most people are led to believe. Brokers and salesmen love these funds, because the performance will always be exactly what they promised -- an approximate tracking of the index. But fundamentally there is one major thing wrong with index funds -- it is an attempt to sell average performance with unthinking management. You should be looking for superior performance with intelligent management. Yet lots of brokers will try hard to sell you an index fund as if it was an acceptable standard of performance. It is not even a measure of performance -- it is merely an average price of a long list of stocks. Don't be fooled. You Can Have a Full Team of Managers Even for a Small Nestegg Many investors haven't the time, experience or inclination to choose and supervise their investments. Family and business might be taking every possible moment, and many can't or won't take the time to invest properly. This is where an investment manager can help. Of course it will cost, but if you don't have the time and experience to do the job, right, a professionally managed portfolio is likely to give you a better return than a self-managed portfolio that you don't devote time to supervise regularly. The Investment Monitor Service is an investment management system that uses top institutional money managers with proven track records. Each manager stays within his specialty, such as blue chip stocks, international stocks, corporate bonds, etc. The monitoring service shifts funds between managers based on changing market conditions. This allows for multiple levels of management -- the managers, who are constantly managed for performance, and the allocation process. As many as 12 different portfolio models are available from the Capital Preservation model to the Global Aggressive Growth, depending upon your investment needs and goals. Each model utilizes eight to twelve managers, all working on your behalf. All this might sound expensive, but it actually costs no more than the management fee in a typical mutual fund, while giving you much greater diversification than being invested in just one mutual fund. The average management fee is 1.75%, and the minimum account size is $25,000. No opening fees, no closing fees, no transaction costs. The service is also available for pension plans, IRAs, and 401K rollovers. Don't let that management fee put you off. Popular money magazines -- who get most of their money from running mutual fund advertising -- have done a good job of convincing the public that investment management comes free because of all the ads for "no- load" mutual funds. But all "no-load" really means is that there is no sales charged added on to the purchase price. There is a management fee, but they don't make it visible, and most people don't read the fine print. So you're not getting free management by using a mutual fund. For more information and a brochure, write Investment Monitor Service, 705 Melvin Avenue, Suite 102, Annapolis MD 21401 or call (800) 545-8972.