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Financial Beat


Disclosure, Travel, Hedge Funds, Insurance, Taxes, Mutual Funds, E-mail, Stocks


Financial Beat

By Yvonne Chilik Wollenberg



Do you know how your funds vote on corporate policies?

Fund companies cast proxy ballots on behalf of their shareholders on various issues, such as executive compensation packages, labor, and environmental concerns. Under a proposed new Securities and Exchange Commission rule, mutual funds will be required to disclose how they vote on corporate governance and other issues involving the companies they invest in. Investors will be able to obtain voting records by calling toll-free numbers or by looking at the funds' Web sites.

Six mutual fund families voluntarily disclose their proxy votes already, says the Shareholder Action Network, a shareholder advocacy group.


Safe hedge funds don't exist

Don't invest in a "fund of hedge funds" on the assumption that it's safer than a single hedge fund, warns the National Association of Securities Dealers. Funds of hedge funds can be registered with the Securities and Exchange Commission, and often have lower minimum investment requirements than traditional hedge funds, but they invest in the private, unregistered hedge funds and therefore use the same risky investment strategies as those of their unregistered counterparts.

(For more on hedge funds, see "What's a hedge fund, anyway?" Aug. 23, 2002.)


Be wary of online shopping for auto insurance

Of six popular insurance Web sites, only one gives instant quotes from a variety of companies for most states, says an analysis conducted by Consumer Reports. InsWeb got top marks for providing detailed quotes covering all the states from nine insurers in 14 minutes. At Insurance.com , on the other hand, researchers spent 23 minutes answering an intrusive questionnaire, and the site covers only 19 states. Esurance and Progressive are one-company sites that sell only their own products. Insure.com will quote rates from 16 states. NetQuote provides no instant quotes at all. Instead you'll get an answer by e-mail in an average of four days.

If you rely on these sites, however, you might miss out on a better deal. The researchers found better price quotes at a Web site provided by the California Department of Insurance. To find your state's site, visit the Web site of the National Association of Insurance Commissioners at www.naic.org . Go to the page for "State Insurance Regulators" and click on your state map.


Changing your air plans will run up your bill

Most major airlines in the US are making it more expensive for travelers to switch flights. If you're like most budget-conscious travelers and buy a nonrefundable ticket, don't count on cashing it in unused. You'll have to formally cancel your ticket if you can't make the flight, and do it before the flight takes off, or your ticket becomes worthless. Expect to pay about $100 to change to another flight. The new fees and restrictions are in effect for American Airlines, Continental Airlines, Delta Air Lines, and United Airlines.



The Feds are looking for wealthy cheats

The IRS is shifting the focus of its audit program to catch upper-income filers it suspects are dodging taxes. High-income, high-risk returns will get special attention as the IRS searches for unreported income or suspicious transactions designed to reduce or eliminate tax liability.

The IRS also will target returns from taxpayers with offshore credit cards, on the assumption that at least some folks are using them to evade paying taxes. Those who don't file a return at all aren't safe from IRS scrutiny, either. The agency says it has new ways of finding nonfilers.  

Fewer deductions for using your car

The IRS is cutting the amount you can deduct from your taxes for driving expenses related to your practice. The deduction for business use of a private car will fall to 36 cents, from 36.5 cents per mile in January for 2003 returns. Blame a drop in fuel prices for the rate decrease.


Keep the faith in your investments—and your investments within the faith

A growing number of religion-based mutual funds give investors a way to follow their beliefs and make money, too. Religious funds make investment decisions in accordance with the precepts of their particular faith.

The number of religious mutual funds jumped by 121 percent from 34 in 1999 to 75 in 2002, says a study by MMA, which is owned by the Mennonite Church. By comparison, the total number of mutual funds rose by 16 percent. Assets in religious mutual funds rose from $3.65 billion in 1999 to $4.42 billion in 2002, an increase of 21 percent. Over the same period, assets in all mutual funds went up 11 percent, from $4.3 trillion to $4.8 trillion.


A sample of religion-based mutual funds

Mutual fund
Religious affiliation
Number of funds
Amana Mutual Funds Trust 888-732-6262
Aquinas Funds 877-278-4627
Azzad Asset Management 866-862-9923
Christian Stewardship Funds 800-262-6631, ext 232
Evangelical Christian
MMA Praxis Mutual Funds 800-977-2947
Thrivent Investment Management 800-990-6290
Timothy Plan 800-846-7526



Sick of spam? Vent your rage here

A new Web site gives frustrated consumers a forum for their horror stories about junk e-mail messages. If you've had enough spam, share your anger at www.banthespam.com, a site launched by three national consumer groups: Consumer Action, the National Consumers League, and the Telecommunications Research and Action Center. You can also add your name to a petition filed by the groups with the Federal Trade Commission asking for federal regulations to cut down on unwanted e-mail.


Sound too good to be true? Guess what. . .

Shady stockbrokers and stock analysts have joined other con artists on the top-10 list of investment scams for the first time, says the North American Securities Administrators Association. Hucksters are taking advantage of the volatile stock market and luring victims who are looking for safe, yet lucrative investments.

Here are the top investment scams, ranked by NASAA in order of both prevalence and seriousness:

1. Bogus securities sold by unlicensed individuals, such as independent insurance agents.

2. Unauthorized trades or other shady practices by stockbrokers. Check your brokerage statements for unexplained fees or other suspicious items.

3. Pumped up research by stock analysts.

4. Promissory notes or short-term debt instruments often sold by independent insurance agents and issued by little known or nonexistent companies, promising returns as high as 15 percent a month, with little or no risk.

5. "Prime bank" schemes, which promise triple-digit returns by providing the "secret" investments of elite banks.

6. Viatical settlements, or investing in the death benefits of the terminally ill.

7. Affinity fraud, or scams in which con artists use victims' religion or ethnic background to gain their trust.

8. Charitable gift annuities, or transfers of cash or property to a charitable organization. While most charitable annuities are legitimate, be careful of those involving little-known groups.

9. Oil and gas schemes, in which people unknowingly invest in poor or nonexistent oil and gas wells.

10. Equipment leasing scams in which victims are sold interests in equipment such as payphones or ATM machines.

Before you invest, call your state securities regulator to make sure the person offering the deal is licensed and the investment itself is registered. Find the phone number for your state regulator by visiting the Web site of the NASAA at www.nasaa.org .

The author is a freelance writer in Teaneck, NJ.


Yvonne Wollenberg. Financial Beat. Medical Economics 2002;21:11.

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