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Show Saal The Motley Fool Researching Online How should research a company online? — A.R., Tenn. Start your digging at the company’s Web site. There you will often find a history of the firm, descriptions ofits products and services, an archive of press releases Mission: To Inform, to Amuse, and to Help You Make Money Meetthe HORS Menill ree recently new kind offinancial Fe Hod Holding Depositary Receipts, or reports and annual 10-K reports). The 10-K reports typically include a lengthy section on risks the firm faces, as well as management's view ofthe company’s prospects. You will need to learn aboutthe firm’s industry, as well as the company’s competitive position and prospects. Determine exactly how the company makes money and how financially healthy it is. (Does it have a handful of big customers or many small ones? Risingor falling debt levels? Rapidly increasing sales and prof- HOLDRs, permitting investors to purchase a basket of related companies (usually 20) in a single transaction. There are HOLDRs available for telecom, pharmaceutical, Internet, biotech, broadband and semiconductor companies, as well as regional banks and utilities, and more. AHOLDRholder actually owns shares of each underlying company, receiving any dividends and annual reports. The HOLDRs are not managed, and once the oupee and amounts have been determined, they are fixed and no companies will be substituted. In this way, HOLDRs differ its? Piles of cash?) Atsites such as www.quicken.com/ and guide.com, growth trends,price charts and more are a click or two away. At www.office.com, you can learn a lot about many industries. Finally, you will also find industry perspectives, company news and a host of research resources at www.fool.com. Sunday,February 18, 2001 somewhat from Spiders (SPDRs, or Standard & Poor’s Depositary ipts) and other traded funds, which will add and delete stocks, usually in conjunction with an index that they are tracking. Unlike actively managed mutual funds, HOLDRshareholders pay no managementfees or sales loads — just an administrative fee. HOLDRs trade just like stocks, with valuations that fluctuate throughoutthe trading day. To buy them, you place an order with your brokerage (which doesn’t have to be Merrill Lynch)just as you would for any other stock. This is considerably cheaper than buying each company separately, which could cost $200 to $300 even with a discount broker. HOLDRs can be purchased onlyin 100-share “round lots.” Thus, the minimum investmentfor the biotech HOLDRis currently around $15,000,and it is about $6,000 for the telecom HOLDR. Each round lotae a ic number of underlying shares. So with 100 shares of the pk pharmaceutical HOLDR, an investor scald hold 22 shares of Merck, 58 shares of Pfizer, 10 of Eli Lilly, four of Biovail, one of Allergan and so on. HOLDRs can also be exchanged for the actual shares of the underlying stocks. This is called “canceling”and costs $10 per 100 shares. One drawback of HOLDRs is that their contents are fixed. New, exciting companies in a HOLDR’sniche won’t be added to it, and poor performers won't be removed. A HOLDRcreated in 1999 might not contain the best representatives of an industry as of 2001. Still, there is a lot to like — and more to learn — about HOLDRs.If you are interested in learning more,visit www.holdrs.com. What is meantby an “actively eocce Gota questionfor the Fool? Send it in — see Write to Us | was founded in 1910 by aNebraska teen-ager who moved to Kansas City, Mo., with some shoeboxes full of postcards. In 1917, | began selling gift-wrap.| got my current namein 1925, and the familiar slogan | use today was introduced in the 1940s. | produced myfirst Valentine in 1913, and today| offer 1,330 different Valentine’s Daycards. My 50-year-old dramatic series has won more Emmy awards than any othertelevision program. | am one of America’s most admired companies, and my 19,200 employees own more than one-third of me. | am an enormous enterprise, but I’m privately held. Who am |? > BiMay) me Newsletter Blues Abouta dozen years ago, I served on a charitable organization’s board of directors. A fellow director was an apparently successful commodities broker who published a very expensive newsletter. As a courtesy to fellow board members, he sent us complimentary copies and urged several of us to become investors. I explained that I was unwilling to do the requisite studying for sound investment, but I offered to give him $5,000 to invest in my name for one calendar year. At the end ofthat year,if there had been any significant increase, I would consider investing more of my retirement savings with him. After 10 months, however,I had to renege on myoffer, and asked that he return my remaining $385. — HLS.R., Del Mar,Calif. The Fool Responds: This is a great teminderthat some people who seem to knowtheir stuff aren’t as talented as they seem (although losing 92 percentof your investmentin just 10 monthstakesa certain kindoftalent). Commodities also warrant some extra caution, as they can be very risky. Investments in big pharmaceutical companies such as Merck have been strong performers for investors. These firms tend to possess strong intellectual property, high--margin profits and a fastbase. Look at the performance of the Nifty Fifty stocks, the so-called obviously good stocks that soared to the women,Darla Hoffof Idaho Falls. “That's just a sad thing to see these gorgeouspotatoes that people could be eating spread outon thefield. That breaks yourheart.” The giveaway started small, with donationslocally to a women’s shelter, the Salvation Army and other places, Hoff said. Then a regional food bank put the farmers in touch with America’s Second Harvest, a Chicago-based network of 200 food banks and a longshot, but Merck has‘recently been tearing up the track. An FDA has agreed to recommend that the label for Merck’s painkiller Vioxx reference a study noting that the drug is gentler on the stomach than naproxen, sold over the counter under such names as Aleve and Naprosyn. The panel added that Merckshould conductfurther studies to determine whether Vioxx creates higher risk of heart problems. In an increasingly cautious and competitive medical care delivery system, labels matter. They can provide a marketing edge,too, as a company’ssales messages are restricted to the permitted label uses and claims. Labels determine a drug’s target audience — and Merck’s labels warrant a closer look. LAST WEEK’S TRIVIA ANSWER | was bom in 1946 when Texan started fc company called Zero i lucts in , hotels, ‘service operations. | rakein rea $20 bon por yearn sai. lam munications equipment giant, but | sound like one. Who am |?: (rower SYSCO) Write to Us! Sendquestions for Ask the Fool, Dumbest (or Smartest) Investments (up to 100 words), and your Trivia entries to Debating the Issues agreed to take 15 million pounds. It is unlikely to have muchofan effect on potato prices, butit will be the single largest donation of food ever to America’s Second Harvest. In its last fiscal year, Second Harvest distribufed 36 million pounds of fresh produce. Second Harvestis raising moneyto coverthe shipping costs — about $2,500 per truck. Donations from private companies have paid shipping for 80 truckloads, as well as someof the bagging costs. “For the growers to put this amountoffood into the systemis terrific,” said Bill Hoover, who runs a Fort Wayne, Ind., food bank thatgot its first truckload of potatoes this week, By Thursday, half already had eee’ “It's a neat thing watching it all unfold,” said one of 1970s. The subsequent performance of the pharmaceutical companies in this group was impressive. From 1972 through 1997, seven ofthe top 15 performing stocks in the Nifty Fifty were pharmaceutical companies. Merck came in at No.7 overall, offering patient investors USING UTAH'S WATER food-rescue programs nationwide, The food banks THE ASSOCIATED PRESS less) and send it to The Motley Fool c/o My Dumbest Investment. Got one that” worked? Submit to My Smartest Investment. If we print yours, you'll win a Fool’s cap! giddyheights in the early Fool@fool.com or via regular mail c/o this newspaper, attn: The Motley Knowthe answer? Send it to us with Foolish Trivia on the top and you'll Fool. Sorry, we can’t provide individualfinancial advice. be entered into a drawingfora nifty prize! See Tee FU eiee Hee eee eeceeesecceceseccoecoeccoecosesonsoesesoecsecsoeoeels : © 2001 THe Morey Foou/Dist. 81 i. Idaho Farmers Give Excess Potatoes to Food Banks WASHINGTON— Idaho's potato croplast year was so big the spuds are practically worthless. The government wouldn’t take them, so at the suggestion of their wives, the growers decided to give about 24 million potatoes to the poor. Instead of letting the surplus spudsrotin fields, they are sending 360 truckloadsof them to food banks across the country. : people who could get away with telling the truth to the King or Queen. The Motley Fooltells the truth about investing, and hopes you'll laugh all the way to the Making It Matter at Merck it down to 100 words (or Actively managed funds are tun by professionals whotry to maximize performancebycarefully selecting securities. Passively managed funds include index funds, which are based on a predetermined set of holdings. An S&P S00 index fund, for example,will just hold the 500 stocks in that index, in the same proportion. Minimal managementand decisionmaking is needed. The irony we love to point out is that the vast majority of managed stock funds underperform the market, so youare usually best off sticking with index funds (which have lower fees, to boot!). Remember Shakespeare? Remember “As You Like It” In Elizabethan days, Fools were ce only My Dumbest Investment Do you have an embarrassing lesson learned the hard way? Boil managed” mutual fund? — S.P., Reading, Pa. WhatIsThis Thing Called| ‘The Motley Fool? Peececccccvccscceccces The Salt Lake Tribune BUSINESS been given away. Thefirstfive truckloads of spudsleft Idaho on Feb. 6. The food banks are giving the potatoes to soup kitchens, food pantries, women’s shelters and other local feeding programs. like to thankthefollowing sponsors fortheir in this activity. Look for the supplement'o your newspaperto learn mor ising Utah'swie: AT il)ee “Nationwide Weekend Calling" (2000 min per month)** includes: Newlocalcallin ‘UT, C0, 1D, WAZandNM BEAT ANY OMPETITOR © Free Caller I.D. * Free Paging * Free Voice-Mail * Ist Incoming Minute Free * Call Waiting/Call hold ¢ Three Way Calling WE'LL MATCH OR PRICE! Utah Offic feleK 6] WE HAVEIT ALL! WirelessEtc. © 361 West 500 South * Bountiful * 295-5656 YoreStrean 7 Authorized Dealer saeee ees A 448West Antelope Dr. #4 Layton * 775-0350 SI2E.FortUnion 72008)+SLC_+ 567-087 ihe ——we 1 more Sate. 500 1 _ ation on the Utah Debate nee ye} Cea Ma Ae eo Teas a |