ROYAL ADVISOR FUNDS. Bank funds have traditionally been no-load vehicles. But 
now that all the banks have their own brokerage services, that's changing. New fund lines 
are being introduced that can be sold by their sales teams on a commission basis.

The RBC Advisor series is the latest addition. There are 16 funds in the group, most of 
which are under an "umbrella" fund that allows transfers between classes without 
attracting tax. (Of course, when you cash out entirely, your profits will be subject to 
capital gains treatment.)
The new entries haven't been around long enough for us to get a reading on them, but it 
will be interesting to compare their results after they have a couple of years behind them 
with those of the original no-load funds.
In many cases, we don't expect them to be much different since several of the Advisor 
funds have the same mandate and the same manager as their no-load counterpart. Even 
the MERs are comparable. The only real difference is that you'll pay a sales commission 
for the Advisor fund but not for the Royal fund. Now why would a smart investor do 
that?	 	         


HEDGE FUNDS. The turbulence in the stock markets has encouraged some investors to 
look for other options. One new fund that's getting some attention is the Mackenzie 
Alternative Strategies Fund. It invests in a portfolio of hedge funds, including many 
that you've probably never heard of like Green River Offshore Fund, Titan Volatility 
Fund, Northstar Offshore Fund, etc. The goal is to achieve an above-average rate of 
return regardless of what the stock markets are doing and so far the fund has succeeded in 
achieving exactly that with an 8.1% return in 2001. Unfortunately, you have to have a fat 
wallet to participate; the initial entry fee is as high as $150,000, depending on where you 
live. However, if you're an Ontario resident and qualify under that province's new 
"sophisticated investor" rules, which are based on net worth and/or income, you can buy 
in for as little as $25,000.

If that's still too rich for your blood, take a look at the Newcastle Market-Neutral Trust

(NMN.UN), a closed-end fund that trades on the Toronto Stock Exchange. It also invests 
in a portfolio of hedge funds. Recently, it was trading in the $18 range, and it hasn't 
shown much movement over the past year in terms of unit value. However, it offers a 
steady income stream, which is targeted to be $0.40 per unit each quarter. Recent 
distributions have actually been well in excess of that.


SPECTRUM FUND STARTS WELL. While we're on the subject of off-beat 
investments, we told you last year (MFU June/01) about a new fund called Spectrum 
Tactonics, which specializes in exchange-traded funds (ETFs). We commented at the 
time that we liked the unusual concept but were adopting a wait-and-see approach.
So far, the fund has lived up to early expectations. It hasn't been a world-beater, but it has 
certainly performed credibly in a difficult market. The fund gained 1.3% in the final six 
months of 2001, compared to an average loss of 3.7% in the Global Equity category.

Currently, manager Karen Bleasby is concentrating the portfolio in ETFs that focus on 
U.S. healthcare, consumer staples, basic industries, and the Russell 1000 Value Index. 
We're not ready to add the fund to our Recommended List yet, but we'll continue to 
monitor its progress. 


- Gordon Pape

		
Talk about not being able to tell the players without a program! One of Canada's largest 
mutual fund companies is remaking itself from top to bottom, and in the process 
performing some radical and unexpected surgery.

Last month, without any fanfare or even a formal announcement, Mackenzie Financial 
quietly retired the brand name on which it rose to near the top of the heap back in the 
1980s. The Industrial Group of Funds, the company's original product line, was 
dismantled and the pieces scattered among the other Mackenzie families.

The news was revealed at road shows across Canada - meetings with investment advisors 
at which Mackenzie executives and fund managers unveiled their plans for the year 
ahead.

The move was just the latest step in a wide-ranging rationalization within the giant firm, 
the fourth-largest in the country with assets under management of more than $33 billion. 
And it's not the end of the story by any means; corporate executives promise there will be 
more streamlining to come.

That's welcome news for both investors and financial advisors, who have found it 
increasingly difficult to grope their way through the labyrinth of mutual funds that has 
been built over the years. Even with the latest consolidation, Mackenzie shows an 
incredible 258 entries on Globefund, including spin-off funds and different unit classes.  

The main beneficiary of the Industrial demise is the Maxxum funds, which along with 
Scudder funds passed under Mackenzie's control last year after the company was 
purchased by Investors Group. Investors had previously acquired the other two product 
lines.

We had expected that Mackenzie would fold the Maxxum funds into its existing line-up. 
Instead, it decided to retain the Maxxum brand name, despite the fact it has no meaning 
and little public awareness, and dump Industrial. Apparently, the feeling within the 
company was that investors perceived the Industrial title as passé as a result of a long 
period of indifferent returns from some key funds in the group.

A Mackenzie executive also commented that the Industrial funds were no longer 
investing exclusively in industrial companies, but that's been the case for more than a 
decade.

What's especially interesting about the move is that several Industrial funds have looked 
much better recently. Five of them made the Top Choice category in Gordon Pape's 
2002 Buyer's Guide to Mutual Funds: Horizon, Dividend Growth, Balanced, Income, and 
Pension. But good performance clearly wasn't enough. Investors weren't noticing and 
Mackenzie apparently felt the image had been tarnished and it was better to go forward 
with something different. The Maxxum name was kicking around so it became the 
choice.

So if you have money in any fund that bore the Industrial name, check with your 
financial advisor. Your fund either has a new name, or is being merged out of existence.

Three funds go to the Maxxum line: Industrial Dividend Growth becomes Maxxum 
Dividend Growth; Industrial Pension becomes Maxxum Pension; and Industrial 
Horizon becomes Maxxum Canadian Value. All continue to be managed by veteran 
Bill Procter.

The disappearance of the Horizon name marks yet another departure from the company's 
history. Industrial Horizon was the first major fund in Canada to offer a back-end load 
(deferred sales charge) purchase option. This was back in 1987. It may seem hard to 
believe but at that time (only 15 years ago) all commission-based funds in this country 
were sold on a front-end load basis. You paid your money at the time of purchase, and 
the fee could be as high as 9%.

When Industrial Horizon burst onto the scene with its no-money-down approach, 
investors flocked to it. Within a couple of years it had become the largest mutual fund in 
Canada and revolutionized the entire industry. But at the time of its demise it had shrunk 
to about a quarter of its former size and was only a bit player on a much larger stage.

Three other Industrial funds were moved into the recently-created and growing 
Mackenzie product line. Industrial Balanced Fund is renamed Mackenzie Balanced 
Fund; Industrial Income Fund becomes Mackenzie Income Fund; and Industrial 
Growth Fund becomes Mackenzie Growth Fund. 

That last move is the big anomaly in all this. The Mackenzie line is made up mainly of 
income, balanced and money market funds. Growth is the one exception. Like Industrial 
Horizon, it's a fund with a proud history. Under the direction of Alex Christ, long-time 
Mackenzie chairman, it was the firm's flagship fund through much of the 1980s and at 
one time was the largest Canadian equity fund in the country, before being overtaken by 
stablemate Horizon. But it fell on rough times through most of the 1990s when Christ 
made big bets on a resource sector that never really took off. Assets melted away and 
today the fund is less than a fifth of the size it reached in its heyday. Christ has finally 
stepped aside (a move we have advocated here for years) and the management team is 
being run by another Mackenzie veteran, Fred Sturm.

Sturm takes a big picture, top-down approach to stock selection, which doesn't mesh with 
the image the company wants to convey of Maxxum as a bottom-up value group. So 
Growth finds itself something of an orphan. It wouldn't surprise us if the company allows 
it to wither away; there was no mention of it in the elaborate briefing book prepared for 
road show attendees.

Finally, one Industrial fund is being merged out of existence. Industrial Equity has been

folded into Mackenzie Ivy Enterprise.

So we're left with six fund families under the Mackenzie umbrella (not including their 
Star and Keystone portfolios). See the accompanying story for a brief summary of the 
investment philosophy of each.

That's still a lot of funds from which to choose. So here's our latest review of the best 
choices from the Mackenzie stable for the year ahead.


For Value Investors
Many value-oriented funds stood up very well in the bear market of 2000-01. That's 
because value managers are dedicated bargain-hunters. They refuse to overpay for stocks 
and, as a result, their selections usually have less downside risk than you would find in a 
growth stock.

Value managers fared poorly in the market boom of the late '90s and they will likely lag 
behind again if we see a strong economic recovery taking shape. But Federal Reserve 
Board chairman Alan Greenspan tells us that the recovery is more likely to be slow and 
drawn-out. That's known as a U-shaped recovery by economists and it's the kind of 
situation in which value funds could continue to perform well.

Here are the top value picks that Mackenzie offers.

Mackenzie Cundill Canadian Security Fund. There's value and then there's deep 
value. That's what we have here. The managers only buy stocks that are trading at deep 
discounts to their book value. It's an approach that produces indifferent results when 
stock markets are raging, but which works wonders in bear markets. No surprise then that 
this fund stood up well when markets plunged. The one-year gain to Dec. 31 was 2.9% 
(C units), which was excellent considering that the average Canadian equity fund lost 
money. The three-year average annual return for the A units (which are no longer sold) is 
an excellent 13.3%. The C units will produce a slightly lower return because of a higher 
MER, but it's not a big deal when the fund is doing so well.

Mackenzie Cundill Value Fund. Now here's a conundrum for you. Japan's Nikkei 
index was the world's worst-performing stock market last year. This fund has 42% of its 
assets in Japan. Result? A gain of 12.7% in 2001 (C units), one of the top performances 
in the Global Equity category. Talk about contrarian investing! After going through a 
slump in the late '90s, Peter Cundill and his team of bottom-feeders are back on track 
again. But be warned: the volatility here is somewhat higher than you might expect from 
a value fund. This one has been on our Recommended List since last year at this time.

Mackenzie Cundill Global Balanced Fund. This is the Cundill line's global balanced 
entry. It's the most recent fund to be added to this group and, like the others, it performed 
very well as markets tumbled in 2000-01. One-year gain to Dec. 31 was 8.1%. Very few 
funds did better, in fact most in the category lost money. The equities side of the portfolio 
contains many of the names from the Cundill Value Fund. The bond side consists mainly 
of Government of Canada issues. This fund is a good conservative choice in the current 
climate. 

Mackenzie Ivy Canadian Fund. This one needs no introduction. It's been on our 
Recommended List since December 2000, and did a good job of protecting your capital 
in 2001 while registering a 2.5% gain. Jerry Javasky continues to offer a safe haven for 
conservative investors.

Mackenzie Ivy Foreign Equity Fund. Javasky handles this Ivy entry as well and brings 
the same management style to bear. The portfolio is heavily concentrated in the U.S. 
(over half the assets). The largest single holding is Warren Buffett's Berkshire Hathaway 
corporation, which tells you just about all you need to know about the style. 

Maxxum Canadian Value Fund.  No one was paying much attention to manager Bill 
Procter's fine performance under the Industrial Horizon name. Maybe the new title will 
fare better. Certainly, Procter has been putting up the numbers since he took over in 1996. 
Returns have been above average over all time periods since then. The fund's focus is on 
banks, conglomerates, and a few energy companies. So what you're really getting here is 
a middle-of-the-road large-cap fund with an Old Economy focus. 

For Growth Investors

Growth-oriented funds took a battering as a result of the collapse of the high-tech sector. 
As a result, recent returns look dreadful in many cases. But we must always look ahead, 
not back. As the economy recovers, growth funds will again come to the forefront and 
you'll want to have some in your portfolio. Here are Mackenzie's best.

Mackenzie Universal Canadian Growth Fund. This fund offers a small portfolio of 
about 25 to 30 Canadian companies plus a few U.S. and international stocks, selected on 
the basis of growth potential but without overpaying. Unlike many growth-oriented 
funds, it stood up well to the bear market, losing only 1.6% in 2000. 
Lately, it's been 
strong, outperforming the value funds on our list as you might expect in a market 
recovery.  The fund invests across all capitalization classes, so you are likely to find some 
names you don't recognize in the portfolio. Although it's a growth fund, overall risk is 
well below average for the Canadian equity category.

Mackenzie Universal Future Fund. The mandate of this fund is to focus on technology 
companies, and we all know happened to them. So it's a tribute to the skill of manager 
John Rohr that this fund lost only 7.6% in 2001. Lately, it's been hot, gaining 16.5% in 
the last quarter of the year. Interestingly, you won't find a lot of high-tech names in the 
top 10 holdings. Instead, Rohr is zeroing in on banks and resource companies like Petro-
Canada, Talisman, and Alcan. This one is poised to do well in a turn-around market.

		
Cundill Funds: Deep value bias, stocks at $0.50 on the dollar is the goal. Contrarian in 
approach; Peter Cundill typically buys stocks in markets that no one else will touch. 
These funds tend to lag in strong markets but are very good performers when stocks 
generally are falling.

Ivy Funds: Value orientation. No big chances here. A conservative, straight-forward 
style that most investors will feel comfortable with.

Mackenzie Funds: Mainly balanced, income, and money market funds. Mackenzie 
Growth Fund is an aberration and doesn't fit the rest of this group's profile.

Maxxum Funds: Bottom-up value orientation, personified in Bill Procter who is the lead 
manager on several funds in this group.

Scudder Funds: Traditional value investors, akin to Ivy in their approach. This group is 
probably next on Mackenzie's list for a major overhaul.

Universal Funds: The go-go family. Higher risk, higher reward potential. Best suited to 
more aggressive investors.

		
The second half of 2001 was a wild time for the stock markets. They went from the 
depths of despondency in the days following the Sept. 11 attacks to the heights of 
optimism at year-end as investors smelled a new bull market in the air.

During periods of such volatility, the best thing investors can do is to pull in their horns 
and wait it out. Preserve capital and get ready for the turn-around that will inevitably 
come.

That's exactly the course we followed when we last revamped our Big Bank portfolios on 
July 1. We could see trouble ahead, so we reduced risk in both the Safety and Growth 
Portfolios. The strategy paid off. All the Safety Portfolios scored modest gains over the 
six-month period, with the Scotia Securities combination faring best with an advance of 
2.26%.

The Growth Portfolios more or less broke even. The largest loss was only 1.16%, in the 
Scotia Growth Portfolio. 

In all cases, it was the international equity funds that dragged down the results. The 
worst-performing fund for the six months was BMO RSP International Index, which 
fell 13.1%. Top performer was Scotia Resource Fund (formerly Scotia Precious 
Metals) which gained 10.8%. It was the only fund to score a double-digit return over the 
period, thanks to the strong advance in the gold sector.

It's now time to start positioning the portfolios for better times to come. A measure of 
caution is still required, of course, but we want to be a little more aggressive going 
forward, especially in the Growth Portfolios.

We are also scaling back our money market fund positions. With interest rates so low, 
these funds will generate minuscule yields in the next few months. The cash can be better 
deployed elsewhere.

These portfolios were started in July 1998, with the goal of determining which of the big 
banks offers the best fund package. Each portfolio had an opening value of $10,000. We 
create a model asset mix, which is then applied to the fund line-up of each bank so 
everyone is on a level playing field. The relative portfolio performance thus comes down 
to how well the managers perform.

To date,  the leader in both the Safety and Growth categories is the TD family of funds. 
The CIBC Safety Portfolio and the Scotia Growth Portfolio have fared worst.

Here is the asset mix model we will use for the first half of 2002.






Comments/Changes:Had it not been for a 12.4% less in the TD International RSP Index

Fund, the Growth Portfolio would have finished comfortably in the black for the period. 
Even with that setback, the loss was fractional. The TD Real Return Bond Fund ended 
its profitable run, dropping 2.4%, and we were a bit surprised by a small 1% loss in the 
TD Energy Fund.

We are dropping the Real Return Bond Fund from both portfolios this time around as it is 
not well suited for the current conditions. In the Growth Portfolio, we will switch the 5% 
weighting from the Energy Fund to the Science and Technology Fund, in anticipation of 
a continued recovery in that depressed sector. 

We will add the TD Short-Term Bond Fund to the Safety Portfolio for defensive 
purposes. Also new is the TD Monthly Income Fund, a low-risk portfolio of short-term 
bonds and high-grade income trusts. 

In the Growth Portfolio, we will use the TD Dividend Growth Fund as our dividend 
entry. It invests mainly in large-cap stocks with more growth potential than the holdings 
in the companion TD Dividend Income Fund, which is used in the Safety Portfolio.








Comments/Changes: The Royal Portfolios turned in respectable performances over the 
period, finishing second in each category. All the funds performed more or less as 
expected, with no big winners and only one double-digit loser: Royal International RSP 
Index Fund, which dropped 12.6% and was the difference between a small loss and a 
profit in the Growth Portfolio. 

The Zweig Strategic Growth Fund has been renamed as the Royal U.S. Mid-Cap 
Equity Fund. We aren't excited about this move and are dropping it from the Safety 
Portfolio. However, we will use it in the Growth Portfolio as it is Royal's only U.S. 
small-to-mid-cap entry. The only other change is to substitute the Life Science and 
Technology Fund for the Energy Fund.



	


Comments/Changes: The only real surprise here was the big 10.2% drop in the value of 
the CIBC Energy Fund over the six months. Energy companies did suffer a hit during 
that time, but this decline was out of proportion. We'll drop the fund this time around and 
replace it with CIBC Global Technology.

We'll add the CIBC Canadian Short-Term Bond Index Fund to the Safety Portfolio. It's an
excellent performer. 

	     






Comments/Changes: The BMO results have been mediocre at best. The Growth Portfolio 
has been very weak and the message there is that if growth is your goal, put your money 
elsewhere. Best performer during the six months was the Resource Fund, which was 
driven by the surge in gold prices to a gain of 10.2%.

We won't make any major change to the Safety Portfolio, except to divide the U.S. 
component between the U.S. Growth and U.S. Value funds for style diversification. 

In the Growth Portfolio, we'll insert a 10% position in the BMO Equity Index Fund, which
tracks the TSE 300.






Comments/Changes: The performance of the Scotia Growth Portfolio is truly pathetic. 
After 3-1/2 years, it shows a total gain of less than 8%. You'd have done better just 
putting your savings into the Scotia Money Market Fund and forgetting about it. The 
Safety Portfolio has fared better, with a cumulative gain of just under 14%, but that still 
ranks it fourth out of five in its category.

Two of the funds on our list had name changes during the period. Scotia Precious 
Metals became Scotia Resources, while Scotia International Growth was renamed 
Scotia Global Growth. Also, Scotia Canadian Mid-Large Cap was merged out of 
existence, folded into Scotia Canadian Blue Chip Fund. 

In an effort to improve the performance on the international side, we will substitute the 
Capital International Large Companies Fund for the International Stock Index 
Fund in both portfolios. It has fared much better recently.

In the Growth Portfolio, we're dropping the Canadian Income Fund and moving the 
assets over to the equity side. 
          

		
Q - In looking for a new Canadian equity fund (growth) my research took me to Opus 2 
Direct.  With their growth fund being no load and the MER being much lower than a 
number of funds I was looking at, I decided to do a little more research. The track record 
of the Opus 2 Canadian Growth Fund since inception in 1999 is quite good and the fact 
that Fred Pynn of Bissett is the manager was instrumental in my adding this fund to our 
holdings. While I realize that Opus 2 has only been around since 1999,  could you 
provide some personal insight into their operation, with particular emphasis on their 
Canadian equity funds? - O.M.
 
A - We discussed this company in the issue of December 2000. It's now more than a year 
later, so let's take another look. The Canadian Growth Fund is doing very well. The fund 
gained 14.8% in 2000 and followed that with a 17.1% advance in 2001. Those are 
remarkable numbers when you consider this is a growth-style fund in what was basically 
a value market.

The Opus 2 Canadian Value Equity Fund also impresses us. It's run by Norm 
MacDonald of Beutel Goodman, one of the top value-management firms in the country. 
It too has stood up well in the bear market, with gains of 21.4% in 2000 and 3.2% in 
2001. The portfolio is decidedly blue-chip in nature, with names like Bank of Montreal, 
Enbridge, Manulife, and Suncor among the top 10 holdings. This fund alongside 
Canadian Growth would make for a nice value/growth style mix in a portfolio. 

Unfortunately, the U.S. and foreign entries have not looked impressive so far, so you may 
want to look elsewhere for international diversification.

The funds are sold directly by the company. You can call for information at 877-296-
7872 or visit their web site at http://www.opus2financial.com   The minimum investment 
is $1,000. The funds are available in all provinces except Quebec. - G.P.

		
There has been all kinds of action on the labour funds front in the past month. Let's 
quickly bring you up to date on some of the more important developments.

Rash of new funds. Despite a dreadful collective performance by labour funds in 2001 
(see the January MFU for details), the promoters seem to think there's still a healthy 
public appetite for them. At least 10 new ones have appeared for this RRSP season.

Centerfire Growth Fund name change. StrategicNova has take over the management 
contract for the Centerfire Growth Fund and changed the name to StrategicNova 
Venture Growth Fund. A name from the past, Frank Mersch of Altamira fame, has 
assumed the role of co-manager with Gary Selke. Mersch has teamed up with Selke and 
former Altamira colleague Norm Lamarche to form a new money management company, 
called Front Street Capital. 

New approach to labour funds. One of the most intriguing of the new labour funds 
comes from the Front Street boys. It's called Tuscarora Energy Fund and it's unique in 
that it offers no provincial tax credits of any kind. The fund is available across Canada 
and is eligible for a 15% credit no matter where you live.

In fact, Lamarche and his colleagues don't even like to think of it as a labour fund. That's 
just a flag of convenience that enables the fund to invest in the type of private placements 
an ordinary mutual fund couldn't touch.

The reason it gets no provincial credits is that the managers see provincial regulations as 
too restrictive in terms of what they want to do. The federal government's labour fund 
requirements are much more flexible.

"We prefer to consider this as a small-cap energy fund that will position itself to take 
advantage of emerging opportunities in all aspects of energy," Lamarche says. "That 
could include exploration, production, service providers, alternative fuels, and anything 
else."

He believes that the recent consolidation in the oil patch, the latest being the merger 
between Alberta Energy and Pan Canadian Energy, will have the effect of stimulating 
some dynamic new initiatives. He points out that skilled management teams from 
companies that have been merged or taken over are in the process of seeking out new 
opportunities. The stock of one CDNX company, Argonauts Group Inc., doubled in a 
single day in late January when news broke that the former management team of Cypress 
Energy had taken over.

"So we're not focusing on the tax credits here, but rather on the investment potential," he 
says.

The potential certainly looks interesting. However, the fund has to be ranked as 
speculative, so the 15% tax credit serves as a nice inducement. The fund was in the final 
stages of registration in late January. Units should soon be available through all registered 
advisors.

Guaranteed returns. Last year's depressing results (the average labour fund lost 12.2%) 
left some investors feeling a bit gun-shy. As a result, at least one new fund is offering a 
guaranteed return of capital after 11 years. It's the VentureLink Brighter Future 
Balanced Fund, and the mandate is to invest in companies that provide innovative new 
processes for infrastructure and essential services industries, such as water, energy, and 
waste management. Manager is Susan Coleman, another Altamira grad. It's available 
only in Ontario and will close to new investors on March 1. You can get more 
information from Skylon Capital Corporation in Toronto. Call toll-free 877-711-2440 or 
visit their web site at http://www.skyloncapital.com

Extra tax credits. Some of the new entries qualify for Ontario's bonus 5% tax credit, 
which is given to funds that invest significant amounts in research. The Triax E2 
Venture Fund is among the qualifiers. Its focus is on companies developing new 
technologies and solutions in energy and resources. Management team is Meridian 
Advisors Inc., a company that is involved in alternative energy, resource productivity, 
and environmental work. 

Another newcomer that qualifies for research-oriented investment fund (ROIF) status in 
Ontario is the VenGrowth Advanced Life Sciences Fund. It will focus on the health 
care sector and invest mainly in such fields as biotechnology, pharmaceuticals, medical 
services and new technologies.

This fund will look primarily at what are known as "latter-stage development" 
companies. That means ventures that are deemed to be in a position to go public and/or 
reach significant profitability in a relatively short time.

The VenGrowth management team has shown itself to be very effective over the years. 
The original VenGrowth Fund has one of the best five-year records in the business, 
despite dropping 25% last year.

This fund might be worth a look if you're an Ontario resident and you haven't been 
thrilled by the returns from Canadian Medical Discoveries Fund. If nothing else, it 
provides an opportunity to diversify your health care position. 

Calculating returns. When you look at the published returns from labour-sponsored 
funds, they can make depressed reading in some cases. But those results ignore the effect 
of the tax credits you receive at the time of the initial investment.

Manitoba's Crocus Investment Fund has produced some numbers that help put matters 
into better perspective. The fund showed a published average annual compound rate of 
return of 3.5% (to Nov. 30) since its inception in March 1993. However, with the value of 
the tax credits factored in, the annual return rises to 9.8%. That's clearly a much more 
acceptable figure to the original investors.

It should be noted that the tax credits in 1993 were higher than they are now, so the 
impact won't be quite as good for new investors. Nonetheless, the effect of the credits on 
the real return from these funds is significant.

Finally, here are two tips to keep in mind if you're considering investing in a labour-
sponsored fund this year.

You can roll over existing units. Any fund units purchased before 1996 had a mandatory 
five-year holding period (it is now eight years). If you own such units, you can redeem 
them and use the money to invest in new units of the same fund or a different one. You'll 
earn a new tax credit without putting up any new money.
RRIFs are not allowed to invest directly in labour-sponsored funds. 
However, there 
appears to be nothing in the rules that would prevent you from buying units outside a 
plan, claiming the tax credits, and then "swapping" the units into the RRIF for cash or 
other securities of comparable value. Of course, the eight-year holding rule still applies, 
so you may not wish to tie up any RRIF capital in this way.

		
Three Mackenzie Financial funds recently passed their third anniversary and qualify for a 
formal rating. Two are part of the Cundill family, which is performing very well right 
now.

NEWCOMERS
MACKENZIE CUNDILL CANADIAN BALANCED FUND $$$
With the Cundill equity funds doing so well, it is hardly a surprise that this balanced fund 
is also turning in some impressive numbers. The one-year gain to Dec. 31 was 6.8% and 
the three-year average annual compound rate of return was a fine 11.6% for the C units, 
the only ones being sold. Those numbers are well above par for the Canadian Balanced 
category. The equity portfolio is similar to that of the Cundill Canadian Security Fund 
(same management team). Bonds form 36% of the mix and stocks 63%, so the fund is 
virtually fully invested. This fund is likely to show the same pattern as the other Cundill 
entries, with the best results in down to sideways markets. Risk is slightly on the high 
side for the category, but not to an extent that it should be a concern. Best suited to a 
long-term value investor.

MACKENZIE CUNDILL RECOVERY FUND    $$$
Here's a fund that is perfectly in tune with the Cundill philosophy of seeking to buy a 
dollar for fifty cents. Its mandate is to invest in companies that are underperforming, are 
in turnaround situations, or that have low credit ratings - or any combination thereof. 
You've heard of junk bond funds? This might be described as a junk stock fund. As such, 
it has a higher degree of risk attached to it then you would normally expect to find in a 
global equity fund, so if that's a problem for you, stand clear. However, the returns so far 
have more than compensated for that risk. One year gain to Dec. 31 was 6.6%, which 
looks even more impressive when you consider that the average global equity fund lost 
6.7% over that time. Three-year average annual compound rate of return is an 
outstanding 13.2%.  Where were the managers finding the "junk" that was doing so well? 
Mainly in the U.K., surprisingly, followed by Canada,  Japan, and China. If you like this 
concept, Cundill and his team are probably the best in the business at pulling it off. But 
beware of the risk.

MACKENZIE UNIVERSAL WORLD REAL ESTATE FUND   $$
This fund invests in the shares of companies associated with the real estate business, not 
in actual buildings and land. So this is a sector fund that operates in what can be a volatile 
area. The companies represented are truly diversified internationally, with the U.S. the 
largest block at about a third of the assets. Returns have been about average for the small 
real estate category; three-year average annual compound rate of return to Dec. 31 was 
6.6%. Risk is on the high side for the category because of the focus on stocks as opposed 
to bricks and mortar.