Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!news.media.mit.edu!americast.com!americast.com!usa-post Newsgroups: usa-today.invest From: usa-post@AmeriCast.Com Organization: American Cybercasting Approved: usa-post@AmeriCast.com Subject: invest Mon, Jun 29 1992 Date: Mon, 29 Jun 92 05:27:36 EDT Message-ID: 06-29 0000 DECISIONLINE: Personal Investing USA TODAY Update June 29, 1992 Source: USA TODAY:Gannett National Information Network WRAP ACCOUNTS DRAW A FOLLOWING: Investors may be flocking to mutual funds, but wrap accounts are drawing huge crowds, too. The accounts give investors with at least $100,000 a chance to break from the traditional stockbroker-client relationship. The broker serves as an adviser to help pinpoint investment goals and select a private money manager to best fulfill those goals. The manager picks and trades stocks. (For more, see special Wraps package below.) RATE CUT TO BE DISCUSSED: The Federal Reserve's Open market Committee will meet Tuesday and Wednesday in Washington. On the agenda: Debate on whether the economy needs another interest-rate cut; and if so, decide if short-term rates should be cut slightly or deeply. Economist Lacy Hunt says he hopes the Fed will push the federal funds rate down 1:4% to 3.5%. That might spark a cut in banks' prime rate, now at 6.5%. DR PEPPER IPO PRICE CUT: Dr Pepper:Seven-Up has cut its anticipated public offering price to between $17 and $18 a share, it said in a Securities and Exchange Commission filing Friday. It had previously expected $20 to $23 a share. The soft-drink maker hopes to generate $600 million for a recapitalization plan. COMPANIES FILE TO SELL BONDS: Toledo Edison Co. and Cleveland Electric Illuminating Co. Friday filed with the Securities and Exchange Commission to sell as much as $495 million in mortgage bonds. Both are subsidiaries of Centerior Energy Corp. The Toledo Edison Co. filed to sell $250 million mortgage bonds. The Cleveland Electric Illuminating Co. filed with the SEC to sell $245 million mortgage bonds. TRADERS BLAME MEDIA FOR SLIDE: Several Wall Street traders and analysts blame the media for triggering a tobacco-stock sell-off Wednesday by misinterpreting a Supreme Court ruling. Reuters America, Bloomberg News Service and Dow Jones all moved quickly Wednesday, concluding that the court acted to make tobacco companies more vulnerable to personal-injury lawsuits by smokers. Tobacco stocks reacted to the reports. REUTERS SAID RULING HURT COMPANY: Within minutes of a Supreme Court decision Wednesday, Reuters America sent out a headline stating that the ruling went against Philip Morris, which halted trading on its stock. But other major U.S. tobacco companies' shares began tumbling in panic trading. Stocks rebounded after cigarette makers and Wall Street analysts said the ruling makes it tougher to sue tobacco companies. MACHINE TOOL ORDERS DROP: Orders for U.S. machine tools were down in May for the second consecutive month, according to new reports. The development reflects mixed signals regarding the U.S. recovery from the recession, economists say. BOOKS OFFER ANNUITIES INFO: Variable annuities invest mainly in funds sponsored by the company selling the annuity, such as a mutual fund company. The monthly Standard & Poor's Stock Guide - at major libraries - has a section on variable annuities. Another source: Morningstar Inc.'s Variable Annuity Sourcebook, $195. Call 800-876-5005. Companies offering variable annuities include Scudder, 800-225-2470. TREPIDATION KEEPS TRADING MIXED: The stock market was mixed Friday in an atmosphere of uncertainty about prospects for the progress of the economic recovery. Trading set its slowest pace in more than five weeks. The Dow Jones average of 30 industrials slipped 1.60 points to 3,282.41, finishing the week with a net loss of 2.94 points. Gainers just outnumbered decliners on the New York Stock Exchange. GOLD AND SILVER DOWN: Gold and silver prices dropped Friday. On the Commodity Exchange, gold bullion for current delivery was quoted at $342.50, down 70 cents. Republic National Bank quoted the metal at $342.50, off 30 cents. Gold fell in London to $343.50, down from $343.55. Also on the Comex, silver bullion for current delivery was $3.974, down from $4.002. In London, silver fell to $4.01 from $4.04. SPECIAL PACKAGE ON WRAPS: NO CHURNING ALLOWED: Wrap accounts' attraction is their insurance against churning. That's when brokers urge clients to buy and sell securities just to generate fees. Wrap fees are shared by the broker, his or her firm and the money manager working on the wrap account. The fees typically are 3% of the account's assets per year for stock portfolios and balanced, stock and bond, portfolios. ANNUAL FEES GET LOWER: Bond portfolio fees are 1.5% to 2% of assets. The annual fee is reduced as the account grows. There are no other fees. Without transaction fees, there's no incentive to churn the account. Also, instead of requiring investments of at least $500,000 to $1 million, the managers - who don't usually take small accounts - accept investments of $100,000 and, in some cases, less. WRAPS GROW IN POPULARITY: Wraps were introduced in the mid-'70s. But they have only recently become very popular with investors. Account assets now total $30 billion, up 750% since 1988. Much of the growth is because of aggressive marketing. Dean Witter Reynolds opens 2,500 to 3,000 wrap accounts each quarter. Shearson Lehman, the concept's inventor, says its total accounts number more than 100,000. (End of package.) DOW JONES OPENS ON DOWNSWING: The Dow Jones average of 30 industrials opens Monday at 3282.41 after closing down 1.60 Friday. The New York Stock Exchange composite opens at 221.68, up 0.15. The American Stock Exchange market value opens at 374.04, down 0.11. The NASDAQ OTC composite opens at 547.84, down 0.36. 24-HOUR TELEPHONE INFORMATION: USA TODAY Money Hot Line. 95 cents a minute. 1-900-555-5555. Personal Investing Editor: Beth Mann. (1-919-855-3491) Making copies of USA TODAY Update (Copyright, 1992) for further distribution violates federal law. This article is copyright 1992 Gannett News Service. Redistribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send-email to usa@AmeriCast.COM