This week we learn how to research our small cap (and large cap value) mutual fund stock holdings.

More often than not, clients will comment that they just do not understand how a financial writer can continually find enough material worth writing about. However, when you analyse finances, you realise that money (or barter and exchange) transcends almost everything in our lives, except perhaps the nurturing of our souls. Decisions about money impact not only personal finances, but also laws, taxes, property ownership, families, friendships, community, reputations, emotions, and immortality. Whether you like it or not, or want to admit it or not, Management of Money is the Management of our Life, through all its stages.

Ah, the incredible wealth of information out there in Internet land, that if used knowledgeably can help you financially! Go to the Internet and type www.google.com. What's your interest? Type Mutual funds, hit search; goodness, only 1.9million websites! Let's see at one or two visits a day that will take you, way too many years to wade through.

Want even more instantaneous financial information? One only has to stand in front of a Bloomberg terminal and type TOP then the green "GO" key, to see major financial news stories, literally marching across the screen at the rate of one or two per second; yes, not minutes, but seconds. Next time you are in the Washington Mall, waiting in line at the ATM machines, try it. And, while you are there, type in your mutual funds' trading symbols, check up on them. Don' t have the trading symbols, then use the ones we are researching, type SEQUX hit the F8 key (it says Equity on it in small print), then the Green "GO" key, or our mutual fund this week - a small cap growth fund - Aberdeen Global UK Smaller companies fund on our list, trading symbol L0020G180 , then F8, then "GO".

Residents of Bermuda know that the Bloomberg terminals available in public places here are free to use for everyone, courtesy of Mayor Michael Bloomberg. While Bloomberg itself is an extremely successful financial reporting company, this is still a very generous gesture to us all. You do not want to know just how much more thousands of financial institutions who lease Bloombergs pay for the right to real-time global capital market data. It is a superb service, bar none, take advantage of it! In a few more weeks, Moneywise will run a column on basic Bloomberg use.

Clients also say in this economic climate, why bother? What's the point of knowing anything about investments? CEOs out there all seem to be crooks, the market is down; "I am losing money"; "I am not going to invest again". Guess what? For as many `crooks' out there, there are far more honest corporations plodding ahead, bringing in a decent return on capital, year in and year out.

Vowing to stay out of capital markets is not always the answer, nor is putting all of your hard-earned money in `guaranteed' local investments. From time to time, we need to be reminded that as far as unethical practices go, there have been a few scandals right here in Bermuda over the years. Small local investors lost money but the principals (or purported CEOs) of the firms walked away - or should it be sailed away - with great gains. Know what you are investing in, and no matter how good it sounds (or how great a return is `guaranteed'), keep your assets diversified.

Knowledge is power! The more you know about the financial decisions you need to make, the better your chances of achieving financial success!

What's a small cap stock? Typically, it is a stock of a young barely established company, capable of explosive growth and the greatest gains, and just as capable of horrendous losses. The corporation cannot afford to pay dividends; it needs the retained earnings - if it even has any - to grow its market share. Statistically, many of these companies fail in three years, but enough of them succeed to become older dominant mature companies in their industry. What size do you think Microsoft once was?

Our small cap growth mutual fund is Aberdeen Global-UK Smaller Companies (GBP)

Trading symbol: L0020g180 (cusip) / 400884 (sedol)

The fund composition is small cap (less than 250 million GBP) in size companies listed on the London Stock exchange. The mutual fund itself is also really small, only 7 Million. In volume, compared to many extremely fully funded well-known brand names, which may hold investor dollars approaching many billions. Remember that large cap companies are usually above three billion (market cap = number of shares outstanding times the market value of the shares that day). Before long, you will know, understand and remember all of these equations.

This is an offshore fund that can be purchased by those who are not US citizens. You can research this fund at two Websites. www.funds-sp.com and http://www.wallstreetoffshore.com/. Sadly, there used to be more free research offshore websites that I have used, but gradually as is the way when a web-based company can no longer make money by offering advice for free - what is free advice really worth? - these sites, such as Lipper, require you to be a professional advisor and pay for this research. However, there are still some, and the first site listed, www.fund-sp.com is a staggeringly huge mutual fund rating service. It is still free, hosted by Standard & Poors, a company whose reputation is really earned for rating company's credit and financials, and the innovator of the S&P 500 index. We will discuss what indexing benchmarking later in this series.

The second site, www.wallstreetoffshore is an actual direct trading mutual fund platform for individual and institutional investors. On the home page, you click on the fund management company you are interested in and drill down to the funds offered. This website is for the do-it-yourself investor, but do yourself a very large favour. Do your homework. This is not a bingo game; the frustration of trying to deal with an Internet service or a nameless faceless voice on the phone, if things go wrong should make you at least talk to a few financial advisors. Either way, you are going to pay a commission.

This is a nice service, easy to use, not as comprehensive by any means as fund-sp, but surprise, the research is actually provided by, you guessed it, Standard & Poors, the first website listed. You can look this fund up on either website; it will be easier on wallstreetoffshore, as you can just click on the name brand, Aberdeen. See picture.

To add to our mutual fund criteria list, lots to discuss and compare. For one, consistency of management the same fund manager since 1991, and goodness his picture, quite a handsome lad. But today, we are interested in the top ten (and other stock holdings) making up the fund portfolio. We want to figure out what they are, and since we are building a diversified portfolio of mutual funds, we do not want them to be the same stocks that are held in our large cap value fund.

The biggest sin that inexperienced investors make is to load up on one stock that is doing incredibly well (and keep buying it), and then cry, when 50% of their portfolio invested in one stock they just lovvvve, goes down the drain. Refrain, refrain from putting your portfolio in the drain.

Let's compare: the Sequoia Fund's top ten holdings as of August 6, 2002 are: Berkshire Hathaway, Fifth Third Bankcorp, Progressive, TJX, US Treasury note, Fastenal, Dover, Ethan Allen Interiors, Household Intl, Misc securities

Aberdeen Global UK-Smaller Companies top ten holdings are: RE Opportunity 7.50 2011, Tenon, Edinburgh Fund Managers, Singer & Friedlander, Penna Consulting, IMPAX, etc.

Any matches, no? Is this the start of a diversified portfolio of mutual funds? You bet. But, what about the other 90% of the holdings, how do we now what those are? Stay tuned to find out as we actually research some of the individual stocks in the mutual funds, review the company financials and find out how the fund managers have performed, retroactively.

For prior articles on this subject of researching a mutual fund, go to www.theroyalgazette.com and type Martha Myron in the search area to see all archived articles for the past eight months.

lMartha Harris Myron CPA CFP(tm) is a Bermudian, a Certified Financial Planner(tm) (US license) practitioner and Manager, Financial Planning department, Bank of Bermuda. She holds a NASD Series 7 license, is a former US tax practitioner, and is the winner 2001-The Bermudian Magazine - Best of Bermuda Gold Award for Investment Advice. Confidential Email can be directed to marthamyron@northrock.bm

The article expresses the opinion of the author alone, and not necessarily that of Bank of Bermuda. At the date of this article, the author did not own either of these mutual funds, but held a small position in Berkshire Hathaway B shares (BRK.B).