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Show Sunday, April 2, 2000 40 The Salt Lake Tribune WhatWill Trip Up Wall Street’s Bull? “The truth is lot of big moves aren't accompanied by a big reason.” CHARLES A JAFFE Mercy Killing: The Closing of University of Pennsylvania finance professor A Lousy Fund direction.” Consider the landscape in 1973. It is not often thata fund company gives your money back and says it doesn't wantit any more. Yet a small-but-growing number of fund firms is doing just that by killing off unpopular and mostly unloved issues. Munder Value, N/I NuMany leading market watchers argue that there is no bubble in the will fold the remaining funds it boughtfrom GT Global into exi AIM issues. With thousands ofundistinguished languis! ing in mediocrity,it is a trend thatis likely to escalate. “If you have a small fund withouta lot of assets, you havenothing to lose by closing it and lotto lose by keeping it open and having a bad track record outthere,” says Don Phillips, president ofMorningstar Inc. “A lot more funds deserveto be closed, but most fundfamilies have kept hangingon.. . . That could be changing.” Fund companies support ailing funds because: They don’t wantto lose the fees they get for managing theassets; and manydata firms such as Morningstar demand a longer track record before rating a fund, meaning that mai mentis more likely to hold out for a reboundthan to commit a mercykilling. Funds thatare liquidated tend to be small offerings in which shareholders have been inert, sticking with the fund through a protracted period of undistinguished performance. MunderValue,for example, is up an average 12 percentper year since its 1995 inception, but has been a laggard over the last three years. N/T Larger Caphad $15 million in assets a year ago, but a 10 percent-plus loss in 1999 and subsequentredemptions had driven the fund down toless than $3 million whenit announced its inten- tions. Big fundfirms tendto operate in a survival-of-the-fittest mode,killing off weak offspring. They may even close a fundin an out-of-favor sector today, but open a new one — unencumbered by a poor record — whenthe assetclass heats upin the future. Theeffect a liquidation has on shareholders depends on howthe closing is handled. Whena fund liquidates and ‘sends money backto shareholders, pee whodonot hold the praerieyAas must pay taxes on any gains. By compar- ison, a mergertriggers no tax bill, but can mess up an investor’s assetallocation. Numeric Investors chose liquidation because Larger” Cap Value’sclosestsiblings were mid- and small-capfunds. “People boughtthe fund for a purpose, andthe other funds don’t serve that purpose,so the right thing was to close the fund rather than merge it,” company spokesman Lynn Wickwire says. Investors can vote against a liquidation or mergerina proxy,butthe plain truth is that such a vote is not going to change the outcome. Besides, whystick around in a fund when management has saidit doesn’t want to run the money any more? Thatsaid,investors can sell (ortransfer to another fundin the family) when the liquidation notice arrives or ride it outto the bitter end. There is no reason to hope for a miracle when a fund is going outof business. “There are a lot offunds out Jones Industrial Average slid 19 percent between January and August. Yet manyofthe “Nifty Fifty” stocks whose heady valuations had long defied skeptics like Farrell continued to hold up. And further defying skeptics, the Dow roared back and by early October was just 7 percent from its January high. mostrecently the heart-stopping 12 percent plunge betweenits record close of 5048.62 two weeks ago Monday and intradaylow six eave later. False alarm: The Nasdaq has already retraced much of those losses, to standat 4963.03. “We're all looking for the cata- Then, war broke out in the Middle East. It would,Farrell wroteto clients, give “the marketits first test since the high volume advance began three weeks ago. Uncertainty such as the Arab-Israeli conflict cannot be ignored but neither should it be an important determinantof the underlying trends.” In hindsight, the October war in the MiddleEast andresulting Arab oil embargo were keycatalysts of what remains the deepest bear market since the 1930s,ultimately taking the Dow down 45 percent. Theleaders of the Nifty Fifty, like Polaroid and Avon Products,suf- lyst,” says Merrill Lynch senior fered far more, ultimately losing investmentadviser Robert Farrell, more than 80 percentof their peak who has been analyzing market values. behaviorsince the 1960s. “Most of Farrell sees many warning the time we only recognize it by . signs today,in particular the rush hindsight, except for some very of money into a narrowing selecbrilliant people. You only know tion of marketleaders,in this case that the market eventually gets it- companies such as Cisco Systems self susceptible to change when it and Sun Microsystems, while the gets extremely extended in one average stock slumps.In 1973, “the Sark Rt Mors uy of 10 ape bans a SLs ne largest metro areas. are conventional loans at 80 percent loan-to-value. Car loans are for 20 percent down, 48-month, new car. oil embargo . . was the defining event that put the Nifty Fifty out of the game, but most stocks had been Personal loans are for $3,000 24-month unsecured loan. — Mortgages since 1968 or 1969.” Siegel, a finance professor at the University of Pennsylvania’s Wharton School and author of Stocksfor the Long Run, says by definition no one agrees on the signals that bring.a boom to an end, Date _ Others — Credit Car Personal card* 911 15.02 16.26 910 15.00 16.24 863 15.06 13.18 S0-yeer 1S-yeer At This week 8.30 Last week 8.21 Last year 7.01 794 785 665 699 690 5.82 “Average has changed from fixed rate card to a variable rate card. ae the environmentis right, alcan start the prome One example was the seemannouncement by President Clinton and British Bank deposit yields Bank Rate Monitor's weekly survey of the 10 largest banks and S&Ls in the 10 largest metro areas. Prime Minister Tony Blair on MMDA* 6-months 1-year 2-1/2-year 5-year Date March 14 that gene data should be This week 2.04 4.88 Last year 2.10 4.14 Last week company-specific ippo' ments, plunged 13 percentthat day. “Two months ago, Clinton speaking about biotech wouldn't have hadanyeffect at all because everyone was so optimistic,” says Siegel. “The truth is a lot of big moves aren't accompanied by a big reason.Ifthe marketis in the mood for correcting, you can blameit on 2.04 4.85 5.32 5.31 438 5.59 5.56 4.46 6.00 5.95 461 * Money Market Deposit Accounts Re MeTiM edie feces mle Here are the 15 biggest money-market mutual funds open to individuals with their current seven-day annualized yields. Fund (ranked by size) Merrill Lynch CMA Money Fund Smith Bamey Cash Port/Class A Vanguard MMR/Prime Port Fidelity Cash Reserves Schwab Money Market Fund SchwabValue Advantage MF MorgStan Dean Witter/Active Assets Centennial Money MarketTrust MorgStan DeanWit/Liquid Asset PaineWebber RMA MF/MM Port Prudential’Command Money Fund Merrill Lynch Retirement Res. MF Wells Fargo MMF/Class A Alliance Capital Reserves Evergreen Money Market Fund Avg. taxable money fund Tax-free funds any newsevent.” Robert Shiller, a Yale economics professor, in his new book Irrational Exuberance,offers a laundry list of things that couldinterrupt the blissful backdrop now driving stocks higher. They range from a resurgent labor movement oran oil crisis to class-action lawsuits or an unstoppable computer virus. “Thelist can never be complete,”he notes. Shiller's book owesits title to Federal Reserve Chairman Alan Greenspan’s famous warning aboutstock valuesin late 1996, The Fed chairman has remained worried as stocks sailed higher since then, but his warnings and rate rises have done little to shake confidence. This week 5.41% 5.49% 5.72% 5.80% 5.28% 5.62% 5.63% 5.36% 5.56% 5.38% 5.56% 5.68% 5.32% 5.11% 5.26% 5.38% 3.11% Source: Money Fund Report Last week 5.45% 5.34% 5.65% 5.75% 526% 5.62% 5.59% 5.33% 5.52% 5.36% 5.53% 5.64% 5.26% 5.00% 5,23% 5.32% 3.10% 6 mos. 4.88% 481% 5.04% 5.02% 4.71% 5.06% 4.96% 4.76% 4.88% 4.73% 4.89% 5.00% 4.69% 4.50% 4.67% 4.71% 3.02% Gannett News Service Nation’s Farmers Are Shying Away Lone Investor Takes On Corporate Fat Cats From Genetically Engineered Crops THE ASSOCIATED PRESS WASHINGTON — Farmers are turning away from genetically engineered crops, especially a biotech corn that’s toxic to insects, amid consumer resistance that started overseas andis now being felt in the United States. Plantings of the gene-altered corn are projected to drop 24 percent this year, according to findings ofan Agriculture Department surveyreleased Friday. The report also suggested declines in biotech varieties ofcotton and soybeans. “We don’t want to go out here and spend any more money... than we absolutely haveto,” said Allan Morris, who farms near Mason,Ill. “We can’t afford to do that with the margins we have in agriculture.” Biotech crops. had caught on quickly in the late 1990s despite the relatively high costof the seed. Europeans were thefirst to balk at buying biotech grain, which wary Britons have dubbed “Frankenfoods,” but there is also resistance in ASia, anda pee. U.S. companies now are turn’ them down, including ia makers and snack-food giant Frito-Lay Inc. U.S. regulators insist that the biotech crops are no different from conventional versions. Thebiotech corn, known as Bt corn for a bacteria corn that it contains, became especially controversial last year after a Cornell University study suggested it could be killing Monarch butterflies. According to the USDAsurvey, farmers in major corn-producing states intendto plant19 percent of their corn acreage this year to the Bt variety, down from 25 percentin 1999. Plantings of biotech cotton are projected to decline from 55 percentlast year to 48 percentin 2000. Some 52 percentof this year’s soybean acreage is expected to be a biotech variety thatis resistant to a popular herbicide. About57 percent of soybeans last year were herbicide resistant, including a amount it was conventionally bred. “Producers are just trying to protect themselves. The industry seems to be saying they wantless biotech and that’s whattheir interest is, going to where the industry is telling them to go,” said Don Roose, an analyst with U.S. Commodities Inc, Farm groups had expected the reduction in biotech corn because an resistance to the in over- festations of te eenscorn 7 aon pest the corn is designed neered Margaret Mel- lon of the Union of Concerned nr CAMDEN COURIER-POST The thingthat riles Robert Morse most aboutbig BY PHILIP BRASHER Biotech Crops business is big money. Mountains ofcash. Stock options. Bonusesgalore. Farmers are planning to scale back since 1939, says too muchofthe goodies are going to genetically altered crops amid concerns about their impact on the environment and controversyoverseas about biotech food. Here are the percentages of the major crops that are biotech. Corn Insect resistant ‘28 I 21% ‘99 II25% ‘00IE 19%" Cotton All biotech varieties "98 48% ST eeeecinteecmaennel Rie ‘OT 45%, Soybeans Herbicide resistant ‘0 TT42° >) aa 57°, ‘52°, “Includes some conventionally bred Morse, who has been playing the stock market the executives who run corporations — and not enoughiis going backinto the business. Coca-Cola, Wrigley’s chewing gum and Occidental Petroleum — all suggesting the companies cut back on the feeding of whathecalls fat cats. Mostrecently, he wrote one for Disney on behalf of his wife, who is a shareholder. Morse thought Disney investors mightstill be stinging from the $38.9 million severance package the companypaid departing executive Michael Ovitz in ey're plundering these companies,” he said. 995. “Why do you haveto pay somebodyifhe’s not doing “It's sickening.” His white head is bent over a foldingtable piled any work?”he askeed. But the Morse proposal to consider the reduction of; high with newspaperclippingslisting the sales ofinsiders, corporate executives whoare exercising their top managers’ salaries failed at the Disney stockholder meeting in February. Thefinal tally: 73.9 mil-: righttosell their shares in the companies. lion sharesfor,1.56 billion sharesagainst.“The public “T have a tendencyto tear things apart,” he said. is nottoo brilliant,’”he said. “T'm critic, and I like to find fault.” His efforts on behalf of his fellow shareholders Morse sits near thefireplace ofthe house hebuilt in Moorestown,N.J., where he andhis wife, Mary, raised draw precious few responses. “T get complimentary letters,” he lamented. “And their four children. no help whatsoever.” Hesoldstockto raise the money to buy the lumber, Yet he presses on, workingthree days a weekat the hesaid. These days, hesaid heis trying to raise shareholder family jewelry store in Mount Holly and following the marketevery active trading day. consciousness. Heis preparing proposals to abolish stock options Morse is a writer of proposals, a stockholder who for executives of Lucent, GM and Merck. seizes the mostpublic opportunity thelittle guy gets to tell the big corporationswhat is on his mind. He has written proposals for such titans as “Tt should be a straight salary,” he said. “They're » double dipping.” HOME CINEMA REDEFINED varieties. ‘Note: 2000 figures are basedon USDA survey offarmers in major producing states. AP Scientists. Seed companies have insisted that demandfor biotech varieties is in line with last year, although some havebeenoffering discounts to farmers to maintain sales. Monsanto Co.’s biotechsales are “flat to marginally better” than last year, said spokesman DanVerakis. Jerry Dittrich, who farms near Tilden, Neb., planted at least 75 percent of his corn and soybean acreage to biotech varieties last year and isn’t cutting back. They save work andreduce the need for insecticides and herbicides, he said. “I haven't seen any proof that it’s notsafe,”he said. But Morris,the Illinois farmer, planted Btseed onjust10 percentof his corn acreage in 1999 and said he’s going to grow evenless this year, Overall, farmers plan to plant an estimated 77.9 million acres of corn this year, up 1 percent from 1999, and a record 74.9 million acres of soybeans, also a 1 percent increase, according to the USDA survey. Total cotton plantings are expected to reach 15.6 million acres this year, an increase of 5 percent from last year, and the secondlargest acreage since 1962. Sugarbeet acreage is expected to rise by 1 percentto 1.6 million, Wheatacreage is expected to total 61.7 muillion acres, down 2 percent from 1999,reflecting a shift to crops that producers consider more lucrative. Soybeans have become increasingly popular with farmers in recent years because of federal price oes make the crop more than some other commodities, according to analysts. * Stunning Film-Like Images and Theater Quality Sound at Brealethrough Prices! Until now,a high-performance home cinemasystemcouldcost as muchas a luxury automobile. Now,thanks to Panasonic and NHT,TV Specialists can providea true high-performance system including a Panasonic projector, 100” screen, receiver-amplifier/processor, and five NHTspeakers starting at underfive thousanddollars! Panasonic PT-L757 Panasonic PT-L757 projector with HDTY,RGB, DTY, 16:9, and DVD componentvideoinputs. 100” High-resolutionfrontprojection homecinemasystem. 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