European Stars and Stripes (Newspaper) - January 13, 1993, Darmstadt, Hesse                                Wednesday january 13, 1993 Money matters the stars and stripes Page 17court upholds credit card late fees Washington up Consumers nationwide will continue to be charged late fees on their credit card accounts because of a supreme court action Mon Day. A a. The court without comment left intact a ruling that states May not enforce Laws meant to outlaw or limit such penalty fees from credit card issuers who also charge interest on outstanding balances and annual fees. Thirty two states the District of Columbia and puerto Rico have consumer Protection Laws that bar or restrict credit card late charges Many of which Are recent statutes that have not been strictly enforced the courts action monday indicates those Laws a at least those Banning All late charges a now May not be  1st . Circuit court of appeals in Boston had ruled that Federal Law allows Banks to charge such fees overriding the state Laws Massachusetts backed by 27 other states in a Friend of the court Brief asked the High court to Rule that Congress never meant to give Banks and other credit card companies such Power. The Case involves a dispute Between Massachusetts and Greenwood Trust co., a Delaware state Bank insured by the Federal government that issues the discover card to customers nationwide. In addition to a monthly finance charge for a customers unpaid balance Greenwood imposes a $10 late charge if the accounts minimum payment is not made within 20 Days after each months due Date. A several Hundred thousand Massachusetts residents have the discover card but a state consumer Protection Law bars credit card late charges. In 1989, the state notified Greenwood that imposing its late charges on Massachusetts residents violated state Law. Greenwood then went to court claiming the Federal depository institutions deregulation and monetary control act allowed such charges. The state won in . District court but a three judge panel of the 1st circuit reversed the decision calling the Issue a a train wreck of a  it found that a late charge could be classified As Quot interest a allowable under the Federal Law. Massachusetts claims the ruling at a minimum will Cost its Consumers a hundreds of millions a of dollars a year in late fees. Massachusetts also warns that credit card issuers May try to use the ruling to a eviscerate virtually All state consumer Protection controls in interstate banking  Greenwood said the ruling is merely the Quot latest in a Long and unbroken line of decisions involving banking  that stayed Home scored Best in 92 by the Washington Post it was an a a iffy kind of year for Mutual fund investors. They made Money if they were in Domestic Stock and Bona funds. They lost Money if they owned foreign Stock funds. And if they were in foreign Bond funds a Well they could have done better at Home. The biggest a a if of All in 1992 was the election of Bill Clinton. The groundswell of support for Clinton that developed in Early october generated a powerful Stock Market rally that took Many stocks especially those of Small companies to record highs. But if the election had been running in favor of president Bush would there have been a Market rally and if there had been no rally As it turned out of course the rally saved investors from what would have been a disappointing year. Most of the years gains for Stock funds were delivered in the fourth Quarter a october november and december. When the calculators finished their 1992 computations Mutual funds that invest in a Broad selection of Domestic stocks gained 8.9 percent for the year Acho year 1992 was the year when the a amp a Industry went from certain death to possible  David Ellison manager of the select savings s loan fund cording to Lipper analytical services in new York which tracks 2,522 funds. The equity funds however did Only slightly better than the two most closely watched Market yardsticks. The 30-Stock Dow Jones Industrial average gained 7.4 percent while the Standard amp poor a 500-Stock Index Rose 7.6 percent both on a a total return basis. Total return figures include both Price gains and dividends. The 26 funds that invest in convertible securities such As preferred Stock or Bonds were big winners in the income category with gains of 13.6 percent. These funds have an income component which boosts their value in up markets and cushions it on the Downside. Nevertheless the 1992 Stock and Bond results paled beside the huge gains of 1991, when stocks gained 36 percent and Bonds Rose 26 percent. I Blacl Lipper whose firm compiles the Mutual fund results said he doubted that the markets. Current a a up phase now More than 800 Days old could continue unimpeded much longer. A the Market is showing signs of aging a he said. Lipper noted that the longest a a up phase on record was 1,119 Days from 1984 to 1987. _ the Market Lipper said would have to stay a a up All through 1993 to reach a record of 1,177 Days. What he was asked were the chances Quot possible yes. Probable no a he replied. David Ellison manager of the select savings amp loan fund called 1992 a the year when the a amp a Industry went from certain death to possible survival a after two years of huge losses and failures thrifts began to Settle Down he said a the Good news was that things stopped getting worse a Ellison said. Once incs tors got the idea that Strong thrifts would recover Ellison said their Stock prices began to Rise sharply among general equity funds in 1992, the Best result was chalked up by 151 growth funds that specialize in Small to moderate sized companies they gained 12.5 percent for the year. Riding that tide was Michael p. Dicarlo manager of John Hancock special equities fund which gained 32 percent in the fourth Quarter to become the second Best performing fund in the Lipper list. For the year Dicarlos fund gained 30.4 percent. Dicarlo said he handpicked stocks that were showing rapid growth. A if you be got a company that a growing rapidly in a slow growth Economy its cot to be a Strong mover in the Market a he said. Because such companies Are relatively scarce he said the prices of their stocks Are sometimes bid up beyond reasonable Levels. Dicarlo said his winning stocks came from technology and computer companies that specialize in helping other companies operate More efficiently a especially when layoffs have reduced work forces. He also bought stocks that benefited from an upswing in retail  funds face some risk in 93, experts say by the los Angeles times for millions of Bond Mutual fund investors 1992demonstrated that you can lose Money in Bonds and not know it. And therein lies the warning for 1993. Thanks to still High interest rates most Bond fund owners earned Between 5.5 percent and 9 percent on their investment last year according to Lipper analytical services in new York. In general corporate and municipal Bonds paid More treasuries less. But while the numbers Are respectable they hide an erosion in the share prices of Many Bond funds As Market interest rates gyrated and the value of some types of Bonds  result Many fund shareholders actually sacrificed a Little of their principal last year. However the funds earned enough interest income to More than cover the principal loss. For example the largest category of Bond funds a the 129 funds that own . Government securities including Treasury Bonds a posted an average share Price decline of 0.83 percent last year according to Lipper. But because the typical . Government fund earned interest of about 7 percent on its Bonds during the year the net a total return after accounting for the share Price drop was 6.25 percent Lipper said. Though the share Price erosion was slight in most cases Bond experts warned that the damage could be far worse this year if the recovering Economy pushes Market interest rates up thereby depressing the value of older lower yielding Bonds. In fact a sudden jump in rates thursday As investors reacted to a surge in new borrowing by corporations caused a fright in the Bond Market. A in 1993, there is relatively Little margin for error with Bonds a said Robert Rodriguez who manages the first Pacific advisors new income fund in los Angeles. If the Economy grows faster than expected or if president elect Clinton fails to deliver a plan to rein in record Federal borrowing interest rates could continue to Rise Rodriguez said. A the big question he noted is whether the hordes of new investors who be poured into Bond funds in recent years Are prepared to see a much More severe drop in their principal a even if it Only lasts a Short time. Indeed while Stock Mutual funds get most of the publicity assets of Bond funds now total $563 billion Well above the $457 billion in Stock funds. And last year monthly purchases of Bond fund shares Rou. Linely topped even the huge sums going into Stock funds. If you have Money in a Bond fund and especially if you be owned the shares for years and have never had reason to question your investment Many experts advised that you take another look at what you own and Why you re there. Two questions to ask a docs the fund take More Quot interest rate risk than you can handle you should know your funds a average maturity a the average life of the Bonds in the portfolio. Funds that Are reaching for the highest possible yields will typically own the longest Temi Bonds because that a where the highest returns can be found. But if interest rates Rise across the Board this year longer term Bonds will drop much faster in value than Shorter term Bonds. If you can to handle a substantial drop in principal value you  be in a fund that has an average maturity of greater than seven years or so Many experts said. A do you own the right types of Bonds for a changing Economy Many investors have assumed in recent years that they re Safe owning funds that simply buy Short and intermediate term Treasury Bonds. But while the government always makes Good on its interest payments that does no to protect you against changes in the Market Price of the Bonds. If interest rates Rise with the recovering Economy owners of corporate Bond funds May have an Edge this year a because corporate Bonds typically pay More than government securities and the value of corporate Bonds can Rise As the financial health of the companies issuing them improves. With corporate a you can get benefits from a rising Economy which you re not going to get in treasuries a said Don Phillips editor of the Mutual fund values newsletter in Chicago. In fact High yielding corporate junk Bonds the Best Bond fund category last year could repeal again this year experts said