WHAT A RESPONSE

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  Wow, what a response! We had not planned to send out the first issue of the new Investing Today newsletter until early April to allow time for the subscription list to build. But in the first 36 hours after the announcement, more than 1,200 people signed up! We were expecting maybe a couple of hundred in that time, so needless to say we were overwhelmed and gratified.

As a result, we decided to send out a quick preview issue to thank everyone for their interest and to give you a small taste of what’s to come. Future issues will contain more content but this gives you a quick idea of what to expect when we get rolling.

LAST CALL FOR RRSPS

Today (March 1) is the deadline for RRSP contributions for the 2000 tax year. It’s also the last day you can buy units of labour-sponsored venture capital funds and claim the tax credits on your 2000 tax return.

So if you’re been putting it off, this is it! Some financial institutions will be open late tonight to serve procrastinators.

Mutual Fund Report - Scudder kills no-loads

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  (From the March 2001 issue of Mutual Funds Update)

Fund bargain hunters have one less family to choose from as a result of the recent decision by Scudder to kill off their “Classic” units.

These were the original no-load, low-fee funds that the company launched when it entered the Canadian marketplace in 1995.

The plan was to replicate the U.S. success story, where Scudder has been a strong player in the no-load market for decades. The Canadian line-up was designed to compete directly with companies like Altamira, with direct telephone sales, no commissions, and management expense ratios that were among the lowest in the industry.

Unfortunately, despite decent performance numbers, Scudder funds never caught on with Canadian investors. Sales lagged and it became apparent that the company couldn’t hope to grab a major share of the no-load market without a massive expenditure on marketing.

The writing was on the wall after the Scudder family was put into an uncomfortable alliance with the load Maxxum funds under the aegis of Investors Group a couple of years ago. A new series of Scudder units were created, the Advisor class. They carried higher MERs and were sold with sales commissions through the usual mutual fund distribution channels.

The problem from Scudder’s perspective was that no knowledgeable investor would buy the more expensive units as long as the original Classic series was still available. After all, why would anyone want to pay a sales commission and a higher MER for what amounts to the same fund?

The result was the inevitable death of the Classic series. Now your only option if you want Scudder funds is to pay the extra costs.

That changes the whole dynamic. The higher charges mean that the net return to investors will be significantly lower. As a result, the historic returns of the Classic units should not be seen as indicative of what the Advisor series will do.

For example, during the year 2000 the Classic units of the Scudder Canadian Bond Fund returned 9.3%, well above average for the category. The Advisor units, by contrast, returned just 7.5%, below average for Canadian bond funds. More than half a point of that differential was accounted for by the higher MER of the Advisor series. Plus, those figures do not reflect any of the sales charges attached to Advisor units.

It’s the same story elsewhere in the family. The Classic units of the Scudder Canadian Equity Fund returned 6.7% in 2000. The Advisor units gained 5.8%. In this case, the difference was entirely attributable to the higher MER of the Advisor series – 2.66% vs. 1.60%.

The message is that the Scudder funds need to be completely reassessed by investors in the light of this significant development. They are no longer the excellent value they once were. Now they’re just another family of load funds and you should make your decisions on that basis.

By the way, if you currently own Classic units you have the choice of holding them, redeeming them, or transferring them to the Advisor series. Under no circumstances should you choose the last option. All you’ll do is increase your MER and reduce your return.

Note: The March issue of MFU also contains articles on the following subjects:

Across The Chasm - A look at the fund that should do well when the markets turn around

Labour Fund MERs - Why a high MER may actually be a positive sign.

A Good Year for Dividend Funds - Our annual survey reveals the best and the worst in the dividend income category.

Top Dividend Fund Closing - Your last chance to get in on one of the best.

Altamira Portfolios - Best places for your Altamira investments now.

Investing in “Funds of Funds” - Is it a good idea?

New Fund Ratings - AIM American Aggressive Growth, Hirsch Canadian Growth, Saxon High Income

For more information on Mutual Funds Update, go to: http://www.gordonpape.com/mfudemo.cfm

Reducing Equity Fund Risk

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  Many people don’t realize that there are ways to reduce the risk in their equity mutual fund portfolio. It’s simply a matter of knowing how to select those funds that are likely to stand up best in rough markets like these. For more details, check out the text of my latest CBC commentary at http://www.gordonpape.com/cbcradio/Main.cfm?CBCTranscript=191

RRSP's for your Children?

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  Should my child open an RRSP? That’s one of the questions visitors to our site asked this week. To read the answer, go to Our Q & A page.

Six Steps to $1 Million - Pre-Publication Special at 25% off

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  Here’s a chance to get a copy of my forthcoming new book at a special pre﷓publication price of 25% off!

Becoming a millionaire is not a pipe dream. It lies within the power of most Canadians, if they understand the secrets of financial success and are prepared to apply them.

Six Steps to $1 Million sets down a formula for achieving personal wealth that everyone can follow.

In six clearly defined steps, it shows readers how to progress from idle dreams to genuine riches. Whether you're a budding entrepreneur or hope to build your nest﷓egg through careful saving, this book tell you exactly how to proceed.

Perhaps even more important, the book explains how to enjoy your success to the fullest once you've reached your goals. It reflects my philosophy that life is much more than money, but the money makes it much more satisfying.

I believe you'll find yourself referring to this practical and inspirational book over and over in the years to come. And I think it will also be a book you will want your children and your grandchildren to read for its enriching themes.

Six Steps to $1 Million is due to be published in hard cover in May by Prentice Hall Canada at $34.95. But you can order a first edition now at a special pre﷓publication price of $26.22 (a 25% discount) plus shipping and taxes for delivery as soon as it's off the press. Order extra copies for gifts and save the shipping charges on all additional books sent to the same address.

But hurry. This special offer expires on April 30. To order, mail or fax this coupon or call our toll﷓free number: 1-888-287-8229. Or order on-line through our Web site bookstore.

Yes! Please reserve my advance copy(ies) of Gordon Pape's Six Steps to $1 Million, as per my order below. I will expect to receive the books in May.

  _____copies at $26.22 =                     _________    

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Total cost of books                               _________    

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but please add $12 per book for  international shipping and handling.   
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That’s it for our first edition. We’ll be back with you again in about a month.

Best regards,

Gordon Pape