| DOLLARS AND SENSE

“KNOW WHAT your muty- al funds are doing with your money or you could be in- for an unpleasant surprise.” The warning comes from Patrick McKeough, editor of the Canadian Mutual Fund Advisor © and director of research for the | “Investor's Digest of Canada. “Mutual funds can hide their -riskiest manoeuvres and invest- ‘ments in between reporting peri- “ods,” he said in an interview. ° -“Taking.on heavy cisk can pay off for funds in a year like this past ‘one, but eventually. it catches up -with you. . “The mutual: fund industry and regulators spend a fot of time talk- ‘ing about the need to educate the

investing public, particularly new-

comers. They.overtook the fact “that no araount of education can -help you if you ‘don’t know what the funds, are doing with your : money,” - "Tn a front page story in the lat- st issue if the /nvestor's Digest, McKeougkh calls on Edward: Waltzer, chairman of the Ontario : Securities Commission; to require mutual funds to reveal their port- folio holdings at least monthly. “Everything { sce tells me we are headed for.a financial fi iasco “ for mutual fund investors,” McKeough said. “When it hap-

“pens, Canadian investors will lose

more money than they lost in the. ', trust’ company’ implosion of the _ early 1990s. : “es This coming mutual fund col- “lapse has a lot in common with the “trust company collapse. In both ‘cases, Some institutions are saying one thing and doing another with investors’ funds.”

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~ knowing what they are buying.

66 A good tip: Check the kinds of securities the fund held the last time it revelaed its holdings.99

He also cited the collapse of several funds around 1970: “Events now scem to be repeating themselves.”

McKeough said some funds,

claiming to invest in “emerging growth companies,” are putting money into mining exploration companies that he said differ tittle in spirit from your basic Vancouver penny stock promo- tion.

“Other funds calf themselves investments yet engage in frenetic

_ day-to-day trading,” he said.

People should be free to put their moncy into anything they want, but, said McKeough: “the problem arises when investors get

. involved in these activities without

knowing it. The risk is that investors rush into funds with the biggest growth rates without ’ With new operations starting

up almost every day to capitalize on the current popularity of mutu- al funds, McKeough said man- agers are tempted to gamble with: investors’ money to try to produce. strong perfermance results that will help them stand out from the crowd.

“Fund investors. need much more frequent aad in-depth disclo- sure of what their mutual fund

‘managers are doing with their

money,” he said.

“The mutual funds should reveal their portfotio holdings at least monthly. They should break down their holdings according to

- some industry-wide set of invest-

ment classifications that have

some bearing on risk and safety. Noting that he is optimistic

about the stock market (Key Porter

”

has just published his book, Riding

the Bull — How You Can Profit from the Caming Stock Market Baom), McKeough nevertheless urged mutual fund investors to take steps to protect themselves until there is more disclosure - about fund activities.

Look beyond past performance and the strategy statement. Check the kinds of securities the fund held the last time it revealed its holdings. Are you comfortable investing your money in them? ~

“Top fund managers can milk a rising trend more effectively than you as an individual investor, But they may also. be more vulnerable in a market setback, because redemptions may force them to sell mutual fund-sized blocks of shares ata time when nobody wants to buy.” McKeough said.

Therefore, you should consider ,

spreading your money among sev- eral fund families; diversifying within the fund family will offer little protection if all family mem- bers wind up over-indulging in a-

“single speculation that gocs sour.

Also, consider the risks as well as the rewards of fercign invest- ments: Even though economic lib- cralization is opening up vast opportunities in foreign markets, there ure special risks to keep in mind: language barriers, unfamil- iar local customs and unpre- dictable legal systems — not to mention the possibility of currency devaluations.

Mike Grenby is a North Shore- based columnist and independent financial adviser who works with

_ individuals; he will answer your

questions in this column _as space allows — write him clo The North Shore News, 1139 Lonsdale, North

, Vancouver V7M 2H4 |

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PROTECTING YOUR ASSETS

By Russ Johnston and Marlena Quan

Estate planning is nota subject most people like to talk about, It's easy co ignore or put off to another day. Unfortunately, . that is exactly what half of all Canadians are doing.

A recent national survey

commissioned by the Trust

Companies Association of Canada revealed that only about half of Canadians have made wills. Even among those individuals who have made wills, a significant

portion have not had them professionally reviewed in the past three years. Dying without a will (or with one chac is out of date) risks needless taxation, legal challenges,

_ delays, and family serife while

the estate is settled,

The only way of ensuring that your wishes will be followed, and that your assets will be passed on in a timely, tax-effective manner, is to have a valid, up-to-date will made up. For individuals with no will at all, this means having an estate plan developed and a will prepared. Those who have an

outdated will. must gec it

professionally reviewed and’ revised.

One area that requires special attention is the choice of executor. According to the, Trust Companies Association survey, 77% of those with wills named an immediate family member as their executor --an often complex task that can leave individuals open to criticism and personal liabilicy for any mistakes. Worse, in one case out of every three, the contents of the will had never been discussed with the named executor. .

In this situation many Canadians, usuaily a child of a deceased person, will face some unexpected responsibilities down the road. Few people.are -

_ experienced in estate - administration ‘or prepared to

deal with complex matters during such an emotional time. For this reason, careful consideration must be given to the individual or institution thac will carry out those instructions.

* If you don’t have a will, prepare one. If you haven’t reviewed an existing will within the pase three-- years, do so.

* Give careful consideration

to your chvice of executor. Complications may expose inexperienced individuals co criticissy and personal liability.

Royal Trust offers estate planning, executor and trustee services for individuals who have no will or need one reviewed, Ask for details at your branch,

Your Estate Planning Tune Up Test

Answer the following questions Yes or No. See below for how to interpret your score,

1. Thave a will. Yes No Not Applicable

2. I have reviewed the provisions of my will within the past three years. Yes No Not Applicable

3. [have obtained professional advice in the preparation and review of my

will. Yes No Not Applicable

4. [have carefully considered who would be most appropriate to act as executor of my estate.

Yes. No Nor Applicable

5. My spouse has a will and has reviewed it recently, Yes No Nor Applicable

G, [have named beneficiaries on all -

registered retirement savings plans

which are consistent with my will... Yes No Nor Applicable

7. Vhave reviewed my life insurance policies within the past three years to ensure they provide adequate ; protection for my family. --

Yes No. Nox Applicable

8. My spouse and I have given each other power of attorney to actin the”

event one of us is incapacitated. Yes No . Not Applicable

Give yourself eight points, Deduct one: point for every. No answer,

Score 7-8: You have a solid estate planning program and appear to be taking appropriate steps to keep it up

to date.

* Score 4-6; You have the basic elements”: - of an estate plan in place, but the

chances are it is out of date, Take steps to review it as soon as possible. *

Score 3 or less: fou should do more 10 ensure that your assets are protected; otherwise, you risk not having your wishes followed. Consule a a professional

Next Week. * "Curing. te Cost of Probate”

ROYAL TRUST invites you to attend one ofthe following presentations on:

WILLS & ESTATE PLANNING

Seminar Daiss & Locations * in your area,

North Vancouver Branch

RSVP RUSS 351-8550 March 3, 1994 7pm-9pm March 8, 1994 7pm-9pni

West Vancouver Branch

RSVP MARLENA 922-3276

March 2, 1994 2pm-4pm March 10, 1994 2pm-4pm

No charge for admission. Seating is limited,