          
          
          Mutual  funds  offer  many   advantages  to  the  individual
          investor.  These advantages include:
          
          
          1. Diversification              5. Dollar-cost-averaging
          2. Professional Management      6. Liquidity
          3. Low Cost                     7. Family of Funds
          4. Ease of Recordkeeping        8. Convenience
          
          
                             ====================
          
          
          1.  Diversification:
          
          "Don't put all your eggs in one basket." We have  all  heard
          these  words  many  times.   In  investing this is certainly
          true.  If you invest your nest  egg in the stock of a single
          company and something unforeseen happens, i.e., the  company
          goes  bankrupt,  new  technology makes the companys' product
          obsolete, ect., you could wipe out your entire investment.
          
          A  major  attraction  to mutual funds is the diversification
          they offer investors.  A  typical  fund will have dozens, or
          more likely,  hundreds  of  different  securities  in  their
          portfolio.   A  poor  performance by one of the companies in
          the portfolio will have much less  of an effect on the total
          return and safety of your principal.  Every dollar you  have
          invested in a mutual fund has this diversification.
          
          2.  Professional Management:
          
          Professional  management is another key attraction to mutual
          funds.  The average investor just  does not have the time or
          experience needed to make informed and profitable decisions.

          Fund  managers  perform  extensive  economic  and  financial
          research.  They may visit hundreds  of  companies  and  talk
          with  thousands  of top business executives in a years time.
          They  study  balance  sheets,  trade  publications, research
          reports, marketing reports and a myriad of  other  financial
          data.   When you buy shares in a mutual fund you are getting
          this professional management for  a relatively very low fee.
          The typical management fee of a  mutual fund is 1/2 of 1% of
          that  funds  assets  on  a  yearly  basis.   On   a   $5,000
          investment,  this  is  a yearly fee of $25.00.  Professional
          money management has  always  been available to institutions
          and wealthy individuals.  Now it is  available  to  everyone
          through mutual funds.
          
          3.  Low Cost
          
          Even if you had the  time, the experience, and the knowledge
          neccesary to profitably  select  your  own  stocks  and  the
          wherewithal  to  properly  diversify,  you  cannot  do it as
          cheaply as a mutual  fund  can.  Even using discount brokers
          you will pay up to two percent or more in commissions - even
          more using a full service broker.  You will pay  again  when
          you sell.  Because they may buy millions of dollars worth of
          stock at a time, mutual funds are able to negotiate broker's
          fees to the bare minimum.
          
          Using no-load mutual funds there are no sales charges - 100%
          of your money is being invested for  you.   There  are  even
          funds  which  have  no minimum initial investment or minimum
          subsequent investment  -  you  can  start  investing with as
          little as $100.00 or even less!
          
          4.  Ease of Recordkeeping:
          
          Mutual  funds  handle  all  the  paperwork and recordkeeping
          necessary to  keep  track  of  your investment transactions.
          They will mail your dividend  checks  promptly  or  reinvest
          them  in additional shares (the choice is yours).  They will
          provide accurate year-end summaries of all your transactions
          for income tax purposes.  If you have any questions many are
          available 24 hours a day via a toll-free phone call.
          
          5.  Dollar Cost Averaging:  
          
          If you fear you will  invest  in  a mutual fund right before
          the  market  goes  into  a  nosedive,  you  should  consider
          dollar-cost-averaging.  This is a technique of  investing  a
          set  amount  of  money  at  regular  intervals,  monthly  or
          quarterly,  rather  than a lump sum all at once.  You invest
          the same amount  of  money  regardless  of whether the stock
          market is going up or down.  In  fact,  this  strategy  will
          turn the ups and downs of the market into an advantage.
          
          Let's look at an example:
          
          Suppose  you  will have $100.00 available to invest for each
          of the next four  months.   You  are  interested in a mutual
          fund whose shares are currently  selling  for  $10.00  each.
          You invest your initial $100.00 and get 10 shares in return.
          The  next  month, despite the fact the market dropped - your
          shares are now  trading  at  $5.00  -  you again invest your
          $100.00 and this time you receive 20 shares.   Let's  assume
          by  the  next  month the market has recovered and the shares
          are again trading at  $10.00.   You  invest your $100.00 and
          receive  10  shares.   The  next  month  finds  the   market
          continuing  its  rise  and  your  shares are now selling for
          $12.50.  You invest your $100.00 and receive 8 shares.
          
          Let's see how you have done:
          
                   Monthly             Share       Shares
                   Investment          Price       Purchased
     
                      $100            $10.00          10  
                       100              5.00          20
                       100             10.00          10
                       100             12.50           8
                      ----             -----          --
                      $400                            48
              ---------------------------------------------------
                      Average share cost - $8.33 ($400 / 48)
                      Ending share price - $12.50
         
          You have invested a total of $400.00 and own 48 shares at an
          average price of $8.33 per share.  Your 48 shares are  worth
          a  total of $600.00 - you have made a profit of $200.00 in a
          mixed market.
          
          Investing A Lump Sum:
          
                      Single          Share        Shares
                      Investment      Price        Purchased
          
                      $400            $10.00          40
                      -----                          ----
                      $400                            40
              ----------------------------------------------------
                      Average share cost - $10.00 ($400 / 40)
                      Ending share price - $12.50
         
          Had you invested the whole $400.00 in the  first  month  you
          would  have  received 40 shares at the price of $10.00 each.
          Those shares  would  now  be  worth  $500.00  for  a gain of
          $100.00.  Certainly a good return (using  our  example)  but
          only 50% as well as using dollar-cost-averaging.
          
          The  stock  market  will always fluctuate.  This is a way to
          take advantage of  that  fluctuation.  Dollar-cost averaging
          guarantees that you will always buy  more  shares  when  the
          price of the shares are lower and less shares when the price
          is higher.  It doesn't take a lot of brilliance or hard work
          -  just  discipline.   You must invest the same amount every
          month (or every quarter).
          
          6.  Liquidity:  
          
          Mutual fund investors can cash  in  their shares at any time
          and receive the current value of their holdings.   The  fund
          is always ready to redeem (buy back) its shares.  Most funds
          will  allow you to use a wire transfer to transfer the funds
          directly to your bank account.  Many funds also have a check
          writing privilege -  if  you  need  your  money  in a hurry,
          simply  write  a  check.   Many  funds  also   provide   for
          redemption via a toll-free phone call.
          
          7.  Family of Funds:
          
          Many  mutual  funds are part of a "family of funds" (a group
          of funds managed  by  the  same  company  but with different
          investment objectives).  The advantage to this is an  option
          known  as  an  exchange  privilege  or fund switching.  Fund
          switching has become  quite  popular  as fund companies have
          made it easy to move your money from one  fund  to  another,
          usually with only a toll-free telephone call.
          
          Switching is an easy and convenient way to take advantage of
          changing  market  conditions.   If the stock market began to
          decline, for instance, and your  money  was in a stock fund,
          you might consider switching your investment  into  a  money
          market fund within the same family.
          
          8.  Convenience:  
          
          Mutual fund  shares  are  easy  to  buy.  Generally, no-load
          funds have a toll-free  number  an  investor  (or  potential
          investor)  can  call  for  information.  Some fund companies
          have even set up  retail  centers  for investors.  Many have
          payroll  deduction  plans  and  some  funds,   with   proper
          authorization,  will  deduct and invest on a regular basis a
          specified amount from the shareholder's bank account.
          
          You  can  automatically  reinvest  all dividends and capital
          gains distributions allowing you  to compound your earnings.
          Conversely, you have the option of  automatic  withdrawal  -
          you  may  elect  to  have  your earnings and/or part of your
          principal sent to you, or anyone you designate, on a regular
          basis (so called check-a-month plan).
          
          Many funds offer checkwriting  privileges.  This can be very
          helpful when you need to have quick access to your money.
          
          Mutual  funds  are   excellent   vehicles   for   retirement
          investing.   The  generally  long-term nature of mutual fund
          investing  fits  well  with   the  long-term  objectives  of
          investing for retirement.
          
          
          
          
                             *** End of Chapter ***
                             
          
