European Stars And Stripes (Newspaper) - February 23, 1986, Darmstadt, Hesse                                Sunday. February 23, 1986 the stars and stripes Page 19 Titi ii  read prospectus carefully is Good advice by Vartania g. Vartan York not read prospectus carefully before  that familiar advice is carried in advertisements for equity Mutual funds and any potential buyer should pay it heed. A prospectus can provide valuable information ranging from the fund s financial his tory and performance to its Exchange privileges and ways to redeem shares. Sales of All types of equity or Stock oriented Mutual funds swelled to a record $27.2 billion last year nearly four times the volume in 1981. Attracted by the Stock mar Ket s recent big gains Many people arc considering an investment in equity funds rather than relying on their own Stock picking ability. When it comes to selecting a fund experts suggest investors rely on some of their own research. Reading the prospectus is a Good Way to Start. Additional advice is offered by Michael upper president of Tipper analytical services a firm that monitors All types of Mutual funds including More than 650 equity funds. Many funds have been allowed to slim output rises output at the nation s factories mines and utilities Rose for the third consecutive month up 0.3 percent in january with urge increases for consumer goods and construction supplies the Federal Reserve reported. ., Europe can maintain economic growth Burt says _.,. I . A Tom Urill a sustained " Burt  up is. Ambassador Rich Ard Burt told a business seminar that the will exists in Europe and the United states to sus Tain economic growth and a free Market. We have the institutional framework and the necessary leadership i the United states the Federal Republic of Germany and other Industrial nations to ensure that economic growth based on an open trading transmission difficulties problems with our York wire pre vent publication today of the weekly Stock Market summary Mutual funds report and the Stock pulse. System will be sustained Burt said. Burt told the Bonn seminar the . Trade deficit was the biggest problem facing the Reagan administration. But he noted that Steps have been taken to counter it including action to improve . Access to foreign markets orderly appreciation of other currencies against the Dollar support for a round of Trade talks and plans to help sustained growth in heavily indebted developing countries. These problems can be overcome. Presi Dent Reagan with his deep commitment to free Trade and Strong stand against protectionism in Congress is the Best Friend Europe has on Trade issues Burt said. Down the contents of the prospectus he said. As a result prospective investors should ask for the fund s statement of additional information which usually includes some information not contained in the prospectus or the annual  fund group generally seem willing to comply on this score. Failure to do so might constitute a warning Flag to the potential buyer Tipper says. We Send the statement of additional information to any prospective or present shareholder upon request said a spokes Man for the. Vanguard group of investment companies in Valley forge a. Vanguard markets and distributes 37 funds of All types with about a million shareholders. Historically the Industry has stressed certain inherent attractions of Mutual funds such As professional managers and diversified portfolios. But past performance also demonstrates that an equity fund provides no sure Road to financial Success. Moreover As the number and types of funds grow it is easy for the aver age person to become confused. Besides boning up on the Reading mate rial How docs a person pick a fund a critical and fairly obvious decision is to identify one s investment objective and then narrow the choices to equity funds designed to meet these goals. For example a relatively Young person putting Money aside for retirement might select a growth fund consisting of stocks that Over an extended period would be expected to appreciate. The individual who has a High tolerance for risk in Hopes of achieving but tar than usual rewards could be attracted to a capital appreciation fund or a Small company growth fund. In Bull markets these funds usually appreciate faster in value in Bear markets they generally drop More quickly than other funds. For investors particularly older people for whom income is the primary objective equity income funds offer one route. These funds tend to invest in More conservative stocks and they Are far less volatile than speculative vehicles. I would advise people to examine the past record of a fund and the consistency of its results the chairman of one fund investment group said. Lipper offered a word of caution about relying solely upon this approach. Past performance is a very dangerous weapon he said. The Way not to use it is to extrapolate. The Way to utilize past performance is to determine in what periods a fund did Well or poorly and Why that occurred. Then you might think about the future and iry to gauge when a similar Sci of circumstances could present  tic also suggested that some prospective fund owners might consider buying not one but two funds with different invest ment objectives. That s because most of us have a mix Ture of greed and fear in our  he said. The greed Factor might be satisfied by a capital appreciation fund while the fear component could be balanced by say an equity income  regardless of the Type of fund selected one Industry executive advised investors to make sure that the people who built the fund s record especially the portfolio managers arc still working  one constant problem in assessing equity funds is that depending upon the vagaries of the Market and the skill of the managers their performance in a Given period is subject to considerable change. Gold oriented funds for example were top performers for the five years ended in 1983. But their performance suffered badly last year reflecting a decline in the value of South Africa s currency the Rand and a drop in Gold stocks themselves. Switching from one fund to another within a management group has gained in popularity leading to a proliferation of funds that tailor portfolios to specific mar Ket sectors such As health care or foreign stocks. But investors May forget that sell ing a fund is like Selling a Stock insofar As it creates a capital gain or loss and establishes a Cost basis. Investor s guide by William a. Doyle q. Al he annual meeting of the Mutual fund in which i Bare invested shareholders were asked to Vole on two proposals to allow the fund to lend its portfolio Securi ties. Both proposals were approved by majority vote of shares at the meeting. Enclosed Are two pages from the annual meeting notice describing the proposals. I Bate read and reread them and get More confused each time. Any time anyone changes what i originally signed up for it makes me leery. Is this a Normal Safe Way for a Mutual fund to handle other people s Money a. Put your worries to rest. An increasing number of Mutual funds lend portfolio securities. Many funds have been doing it for years. It can be counted As a Normal thing. It s also Safe if it s done judiciously. The pages you sent along show that s How your Mutual fund will handle things. The fund will lend securities it owns Only to solid broker dealers Banks and other reputable institutions. And when securities Are put out on loan the fund will receive 100 percent of their value in Cash or . Government securities. The motive behind All this is to produce More income for the Mutual fund. The fund will collect interest when it lends securities. After deducting its operating costs All the income a Mutual fund receives is passed on to shareholders As dividends. Q. After my husband died i went to a broker to invest the Money my husband left me. I told the broker i bad to live on the income from investments. Another lady was with me and heard me Tell him i can t  the broker had me invest $55,000 in a High yield Mutual fund and 545,000 in an Oil and Gas fund. He told me i could sell these investments Back in a Short time. He did t say i would get Back Only 5 cents on the Dollar in the Oil and Gas fund which is what would happen if i sold now. Furthermore the broker never mentioned commissions. I had sold real estate and was under the impression that Sellers pay commissions. Not so. The broker collected big commissions on my purchases. I would never have bought if i had known about those commissions. I am 72 and May have to sell my House because of the terrible financial situation the broker put me in. Is there anything i can do about this a. The broker was required to give you a copy of the Mutual fund s prospectus before you made that investment. The same Rule applies to the Oil and Gas fund if that was a offering. Commissions Are spelled out in each prospectus. If the broker did not give you a prospectus you can try to Nab him for that Rule violation. You might also accuse him of not following the suitability Rule by put Ting you into that highly speculative Oil Ana Gas fund. Some people can afford to take that kind of risk. Based on your let Ter you can t. You can complain to the office of con Sumer affairs securities and Exchange commission 450 fifth Street n.w., Washington. D.c., 20549. But be aware that you will have to prove that the broker acted improperly. King features columnist Dovle welcomes written questions but he can provide answers Only through the column. You can write to him in care of the stars and so ropes. Apo 09211.  Forces