Q. Please give me your opinion of stock in H&R Block Inc.? — JH, via the Internet

A. While nothing is as certain as death and taxes, the latter is undergoing change.

The largest US tax preparer, though it still holds 16 percent of that fragmented market, had a disappointing tax season. There was a decline in the total retail returns prepared compared to the prior year, with tax preparation fees down as well.

The switch of more taxpayers to "do-it-yourself" software and online tax preparation such as Intuit Inc.'s Turbo Tax is given as one reason behind the firm's ongoing market decline.

Meanwhile, new rivals in its traditional tax office business such as Liberty Tax, as well as aggressive long-time competitors such as Jackson Hewitt Tax Services, have put its fee structure under pressure.

Shares of H&R Block are down 18 percent this year following last year's two percent increase. Block, which has done considerable cost-cutting, had a 6.9 percent profit increase in its most recent quarter even though it handled fewer returns.

Besides 12,000 tax offices nationwide, it also offers preparation through H&R Block Online and H&R Block at Home software. It provides retail banking services through H&R Block Bank and business consulting through its RSM McGladrey division. It exited its money-losing Option One Mortgage Corp. and H&R Block Financial Advisors units to better emphasise its tax preparation roots.

Consensus Wall Street analyst recommendation on Block shares is "hold", according to Thomson Reuters, consisting of two "strong buys", five "holds" and one "underperform".

Chief financial officer Becky Shulman stepped down in the aftermath of the recent weak tax season. Though not solely blamed for the company's market declines and sub-prime woes, Shulman had a high-visibility leadership role since 2001.

Because of its sub-prime woes, former Securities and Exchange Commission chairman Richard Breeden was elected chairman in 2007 and experienced manager Russ Smyth named CEO in 2008.

The number of refund anticipation loans - undergoing litigation and increased government scrutiny - has not increased. Some competitors have been unable to obtain bank funding for such loans, further blunting that loan's popularity.

Earnings are expected to decline 11 percent this year compared to the 15 percent increase expected for the personal services industry. Next year's projected rise is 11 percent versus the 13 percent forecast for its peers. The expected five-year six percent annualised earnings increase compares to 12 percent forecast industry-wide.

Q. I'd like to know whether Vanguard Mid Cap Growth Fund is worth putting my retirement money in? — PK, via the Internet

A. While management of this growth-oriented fund is divided between two different advisory firms, both favor companies with strong balance sheets and a firm commitment to enhancing shareholder value.

Only differences are that Chartwell Investment Partners tends to have more stock turnover than the team from William Blair & Co., while William Blair tends to be more price-conscious.

That variance in approach assures that selections will differ even though the main focus is clear.

The $1.4 billion Vanguard Mid Cap Growth Fund has a 12-month annualised return of 31 percent to rank in the lower one-fifth of mid-cap growth funds.

Its three-year annualized decline of three percent places it in the upper one-half of its peers.

"Multi-managed funds often run the risk of looking just like the market, but I don't think you're in jeopardy of that here because when one is zigging, the other will be zagging," said Dan Culloton, analyst with Morningstar Inc. in Chicago. "This is not a core fund for an individual's portfolio but a mid-cap growth portfolio that can complement other funds that are leaning too much to large or small stocks."

The two investment firms have managed Vanguard Mid Cap Growth Fund since 2006. The Chartwell team of Ed Antoian and John Heffern has considerable experience, while the William Blair team of Harvey Bundy, Robert Lanphier and David Ricci has delivered strong results at similar separate accounts.

Both are research-oriented and favor rapidly-growing mid-size firms. The fund is likely to lag in more speculative market periods, said Culloton.

Consumer services represents the largest portfolio concentration at 18 percent, with additional concentrations in hardware, financial services and business services.

Largest holdings in its portfolio of about 100 stocks are Alliance Data Systems Corp., Invesco Ltd., Dick's Sporting Goods Inc., Silicon Laboratories Inc., DeVry Inc., WMS Industries Inc., Robert Half International Inc., Green Mountain Coffee Roasters Inc. and Fastenal Co.

This "no-load" (no sales charge) fund requires a $10,000 minimum initial investment and has a low annual expense ratio of 0.6 percent.

Q. How long does bankruptcy stay on your record and does it only show up on your credit report? — ML, via the Internet

A. If you've watched TV commercials of law firms lately, you're not surprised that personal bankruptcy filings are on the rise. Bankruptcies typically continue on in the recession aftermath.

Chapter 7 bankruptcy, the full discharge of your debt, is reported for 10 years from your filing date.

Chapter 13, a court-ordered reorganisation plan in which you pay back part of your debt, is reported for seven years from your filing date.

"If someone is trying save a home or preserve equity, they would typically be sent over to file Chapter 13, a court procedure," explained Catherine Williams, vice-president for financial literacy of Chicago-based Money Management International.

Because it is a public document, a bankruptcy filing will show up in a public records search. Some standard job applications also ask whether you have filed for personal bankruptcy.

"It will cause a big drop in your credit report score and you will repair that credit rating very slowly," concluded Williams.

"You live on a budget, build some savings and perhaps two or three years after filing you begin to apply for limited credit - and you make sure to pay it back on time."

Andrew Leckey answers questions only through the column. Address inquiries to Andrew Leckey, 555 North Central Avenue, Suite 302, Phoenix, Arizona. 85004-1248, or by e-mail at andrewinv@aol.com

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