Chicago Tribune du lieu suivant : Chicago, Illinois • 47

Wednesday, Junn 27, 1979 Section 4 3 ChicsgoREdwasS: Small business La Salle Street New Horizons Fund performance against Standard Poor's 500 Stock Annual change principal value U.W-S I Percent 55 Havana, r--- JU, Wave of takeovers boosts growth fund performance I IXlIM Rowe Price Horizons fund I premium of 58.5 per cent above the going market price. IN ONE CASE, Johnson ft Johnson acquired Extracorporeal Medical EttebiiiXed 1M0 tzz iu 1 Je ft" 1 I ll. 1 'I l' oI Standard Poor 500 Slocks In -40 -45, Tl Tl 1 1970 71 72 73 74 75 76 77 78 79. EMimale thtouqh July it Source: ftowt Pnce New Honiara Fund. Inc.

par value of its municipal unit trust portfolios. The Chicago-based company passed the $2 billion figure just 2'i years ago. Nuveen's most recent offering paid annual interest of 6.65 per cent, free from federal taxes, which is equivalent to a taxable yield of about 11.75 per cent for a couple with a combined income of $35,200 to $45,800. "The pocketbook appeal of more spendable net income from tax-free unit investment trusts is giving Nu-veen funds the fastest start in their 18-year history," said Richard J. Franke, president of Nuveen.

"If we maintain the $267 million pace of the first five months, we will surpass the $502 million sold in 1975." A unit Investment trust is an un-managed pool of municipal securities that enables smaller investors to invest as little as $5,000 and receive interest exempt from federal taxes. Nuveen is the oldest ami largest firm specializing in this field. New CROP: chief After a six-month search, the appointment of a new chairman of the Chicago Board Options Exchange is imminent, perhaps by the end of the week, an exchange source said Tuesday. However, the name is a closely guarded secret among members of Corporate buyouts of New Horizons Fund holdings 1976-1979 Price of stock Purchase prior lo acquisition price By Terry Atlas THE WAVE OF corporate buyouts has given a significant performance kick to the growth-oriented mutual funds, which have been largely out of favor with investors since Wall Street's "go-go era" came to a precipitous end in 1973. For months, corporate acquisitions have been running at an unusually fast pace, with many small, innovative companies being swallowed by industry giants at substantial premiums over the market price of their shares.

And shares in other small, growth companies have been rising "in sympathy" as speculators jump in looking for potential take-over candidates. The mutual funds, which aim for long-term capital appreciation by in' vesting in "emerging" growth companies, have been outperforming the overall stock market recently, according to figures compiled by Lipper Analytical Distributors, which monitors the performance of mutual funds. LAST YEAR, FOR example, the capital-appreciation funds were up 13.4 per cent in value, more than double the 6.54 per cent gain in the Standard Poor's 500-stock index. In the first quarter of 1979, the funds were up 11.23, compared with 7.08 for the 500. The Chicago-based Acorn Fund has performed even better: It was up 14.5 per cent in the first quarter of this year and 16.92 per cent in 1978.

"I've never done the calculation, but buy-outs are a definite factor," says Ralph L. Wanger the fund's president and portfolio manager. T. Rowe Price Associates, which manages mutual funds with $2.4 billion in assets, has taken a look at the impact of corporate acquisitions on the performance of its New Horizons Fund, which invests in promising young companies. Since 1976, 21 companies In the fund's investment portfolio have been acquired by other companies either for cash or for stock at an average Specialties for $22.38 a share, more than double the market price.

Overall, the fund gained 11.3 per cent this year through June 15, compared to an 8.8 per cent gain for the 500 index. Fund president Thomas C. Barry estimates that buyouts are responsible for about 20 per cent of the fund's performance, with overall growth in earnings end other fundamental factors accounting for the rest. "We don't invest in any company with the idea it may be a buy-out," Barry says. "That's too difficult to predict, and that's not our objective." The acquisitions, he says, have attracted interest to the area of young growth stocks in general.

The activity is a signal that the stocks are underpriced and represent a good bargain for investors, he says. "COMPANIES CAN BUY whole companies leaders in their parts of industry at a fairly cheap price, much less than it would cast to start up their own," he says. The activity has kept the New Hori-tons Fund busy scouting for potential replacements as companies are absorbed by larger concerns. If the deal is for stock rather than cash, the fund normally sells the new shares and uses the cash to invest in other small firms. The fund holds about 100 stocks in its investment portfolio, and has about 250 "active candidates" to add in the future, Barry says.

Barry says individual investors still seem wary of young growth stocks: Many investors were hurl when their stocks fell out of favor six years ago. 'n contrast, he adds, a lot of "profes- sional money" from pension funds and endowments has been moving in, looking for a piece of the new, buyout fueled action. Nuveen's fast pace JOHN NUVEEN CO. has crossed the $3 billion mark in the outstanding Company Purchaser- announcement ottered Premium 3 Steak 4 Ale Restaurants Pillsbury $16i $22' i 35 3 Lee Way Motor Freight PepsiCo 9' 4 20 116 2 Sandoz 1 1'e 19.40 70.5 Motion Industries Gpnuine Parts i 26i 315 ckerd Druqs Jack Fckord 11" 15ft 1 38 0 Cox Cable Communications Cox Broadcasting 1 74 26 46 5 Kar Products Sun Distributors 18 41.2 ESL TRW 47 80 8 American Television and Time 3 11 53.9 Communications Extracorporeal Medical Johnson 4 Johnson 9'a Z2' 141.9 Specialties Mervyns Dayton-Hudson 22 301 39 2 TacoRell PepsiCo 37j 55 0 Tropicana Products Beatrice Foods 33'a 52 53 5 GilbertRobinson W.R.Grace 8 12 59 4 Samuel Moore Eaton 14'i 20 40 4 American International American International 414 1 40 3 Reinsurance Group Cox Broadcasting General Electric 49" 39 1 COMTEN NCR 15V 26? 65.1 'WellTech Bechtel Wells A Hanna Mining 30 39 26 8 National CSS Dun Bradstrent 30' 48 57 4 Tasdata Systems Oak Industries 14V4 28ft 1.2 95 8 the CBOK's search committee who will report to the full board of directors of the exchange at a meeting Thursday in Washington. The new chairman will be the first full-time professional to hold the position, which in the past has been filled on a volunteer, part-time basis by an elected member of the exchange.

The current chairman is Ed ward F. Neild III. Averago 58 5 The change in the position's status follows last year's departure 1 Dollar per shirt equivalent In stock acquisitions. PwKlinq acounriions. 3 Purchase puce olleredPrice prior to announcement, Source: Rowe Price New Horion Fund, Inc.

ot founding President Joseph Sullivan ana a subsequent review of the ex Trlbunt Graphic Working poor's tax break July 1 By Michael Edgerton BEGINNING July employers will be required to make advance payments on the earned Income credit, the tax break designed to help the working poor. The earned income credit is a tax credit Riven to certain lower-income Individuals or families who earn wages below a specified amount. It's expected to help several million low-income wage earners. The change comes about because of the Revenue Act of 1978: Before the legislation was passed by Congress, qualified workers had to wait until they filed their income tax returns to take advantage of the credit. Now they can receive the benefit in each paycheck if they request it.

The employe doesn't have to have a tax liability, which he must have had before to claim the credit. The company that makes the advance can recover It by paying less withholding and Social Security taxes to the government. THE NEW TAX law may not be well understood by workers or employers and there's some question whether it will be implemented widely. "Small companies may not have kept up with these changes," says Albert Kushinsky, the national tax director for Alexander Grant the accounting firm. "They may not have Informed their imployes about the new change, or distributed W-5 forms, which will be used to certify them as qualified to get the credit," Kushinsky adds.

"Most companies will have to consider altering their payroll systems to handle the new computations." Employers should have received directions for handling the earned income credit in a supplement to a document known as Circular and they should also have W-5 forms on hand to pass out to employes. To be eligible for the earned income credit, an employe must be one of the following: Married and entitled to a dependency exemption for a child living at home. A surviving spouse. A head of household who maintains a home for child. The credit is 10 per cent which amounts to $500 of the first $5,000 of earned income, figured on family, not individual, income.

Between $6,000 and $10,000 the credit is gradually phased out. "If the husband and wife have income of over $10,000 in any form, the credit won't apply," Kushinsky explains. "If the wife earns $4,000 and the husband $50,000, for example, there won't be a credit." Let's take as an example a man who is paid $4,500 a year admittedly a bit below the minimum wage. His earned income credit in a year's time should total $450, although his other financial affairs could alter that. It's hard to know what his exact family situation is, but his basic $86.53 paycheck, before deductions, should show an increase of $8 65, or 10 per cent.

i CONSIDER ANOTHER situation, one that's likely to crop up frequently. A man and a wife, with a child, both work. He is paid $5,000 a year, she $2,500. "What reduction applies?" ask Dale Wol-' thoff, a taxpayer service specialist with the Internal Revenue Service in Chicago. "The husband qualifies for a $500 credit, but the family income is in a range in which the credit is scaled down.

What we would do is reduce the credit by 1214 per cent times the amount over the maxi- mum allowed income, which is $1,500 in this case. Although the man got an extra $500 from his em-. ployer in the year, his family income entitled him to only $312.50, or $187.50 less than he should have i received." The details of the man's tax situation have been simplified, but one thing is clear: "It's certain that some individuals will have problems," Wolthoff points out. "Some of them will have to give money back when they file their tax returns." Congress realizes that companies may not be able to move swiftly to comply with the law, and legislation is before the House Ways and Means Committee that asks the IRS to be liberal in waiving penalties for noncompliance while the new law is being put into practice. change's management structure by a member committee.

Tribune Graphic Wisconsin safe from 'war' peril fFarm equipment sales in Midwest ana nationally in isi quarter Unit retail sales (January-March) District sales United States Per cent Per cent change from change from previous previous Number year Number year. Tractors" 7,802 7.4 34.547 Combines 1.152 77 3,248 17.2 Cornheads 927 10.3 1,809 2,3 Balers JJ9 637 2,368 48.4 Forage harvesters 339 8.1 834 5.0 Mower cotidl'tionerrf 847 pp.3 3.073 7.5 Manure spreaders 2.769 2.4 6.343 2.7 4Wi A tt By Mitchell Locin Chicago Tribune Press Service SPRINGFIELD The generals and admirals continued to monitor the situation in the war room here but tensions eased somewhat as the House decided Tuesday to hold off on a declaration of war against Wisconsin. The call to arms was issued by state Rep. Ronald Griesheimer Waukegan after economic strike teams from Wisconsin were spotted in Illinois trying to undermine our business environment. "Attack the Playboy Club in Lake Geneva!" was the battle cry issued by Rep.

Donald Delist er Munde-leinl to attract recruits. "Mercenary forces from the state of Wisconsin have conspired to exploit certain weaknesses existing within the state of Illinois," Griesheimer "the new prairie Fox" said in his resolution of war. THE MOTION to Immediately take up the resolution received only 74 votes, 15 short of the 89 needed. But 44 members voted their "yellow switches," which indicate only that they were present. Even as the resolution was introduced earlier this month, Gov.

Thompson was making a Neville Chamlerlain-type visit to Wisconsin to open up his vacation cabin. Rut that didn't deter the suggestions of lawmakers, who were upset over raids on business not only from sun-belt states, but Midwestern states as well. Noting the sizable number, of aircraft maintained at state universities, Rep. Philip Collins Calumet City said, "One quick strike and we've got them," GRIESHEIMER laid the first strike should be across the border 111 Racine, and then in Milwaukee. 11 ut mayle it was a blessing that the House decided not to lay siege to Wisconsin, especially by way of Lake Michigan.

The Illinois Naval Militia last was called up in the 1930s, and, according to a report to the governor last year, "units are not issued field gear, vehicles, or ships. They are not prepared for prompt response to a callup." 'Seventh District of Federal Reserve Bank of Chicago which includes the north ern parts of Illinois and Indiana, lower part of Michigan, southern two-thirds of Wisconsin, and all ot Iowa. "Units with 40 or more horsepower. Source: Farm and Industrial Equipment Institute Tribune Graphic UPI State Rep. Ronald Griesheimer Waukegan) has a not-so-secret weapon in his proposed economic war on Wisconsin: Let Skylab fall on the state.

Farm tool producers more positive on sales Toffler views computer future Cuts in freight service told information industry group to begin work now on solutions them. Wide gaps in education is one of the problems that a growing dependence on computers will compound. He asked, "What will happen to people who are not literate, verbal and well-educated in a data-drenched society?" A MORE OMINOUS problem Is the economic gap between those now designing and utilizing the information machines, and the more populous impoverished peoples of the world. "Ninety-nine per cent of all science and technology that which lias been developed for the rich, and that's a frightening realization," Toffler said. "Unless we make the computer into a cheap, simple, and easy-to-use tool for the entire world, we risk losing it," in an economic revolution led by the world's poor, lie added.

trial system, and the "leap to a new stage of technological evolution." According to. Toffler, the first wave of evolutionary progress came when people abandoned caves to live in communal societies. The second was the Industrial Revolution. It created a new standardized civilization in all industrial nations, one in which the rules of work and life were rigidly dictated. The third wave will be the breakup of that centralized system, as change accelerates and society becomes increasingly complex.

"THE RAPID GROWTH of the Information industry is a crucial part of that change," he said "The more diverse the components of change, the greater the information exchange that has to take place to explain it." There are many serious consequences of a computer-linked world. Toffler challenged members of the By Elizabeth Brenner COMPUTERS AND Information technology will ride the crest of the "third great wave of change" to transform global society, Futurist Alvin Toffler predicted Tuesday. "I believe we are moving into a period of extreme turbulence, with changes coming together to shake the industrial system, and to transform it into something new," Toffler, author of the best-seller "Future Shock," said. He presented the keynote speech to more than 2,000 listeners at the seventh annual conference of the International Word Processing Association. The group is meeting at Chicago's Palmer House through Thursday.

"TOFFLER SAID the current crises plaguing the world's energy supplies, money markets, education and family structure indicate an eventual breakdown of the traditional indus By Richard Orr Rural affairs editor FARM EQUIPMENT manufacturers are more optimistic now about an increase in 1979 sales than they were early this year. This is the consensus of a survey by the Farm and Industrial Equipment Institute fFIEIl. The survey indicated a majority of manufacturers now believe this year's dollar volume of retail sales will exceed last year's by more than 10 per cent. The forecast compares with one last January of a 7.5 per cent increase. The FIEI said the projected increase is in current dollars, taking into consideration the impact of inflation, and that in real terms the increase may be only about 3 per cent.

KEY FACTORS In the projected increase were said to be inflation, improved commodity prices, sharp increases in farm income, anticipatory buying, higher dairy price and strong export demand. Negative factors in the outlook mentioned by manufacturers who did not agree with the majority include rising fuel costs, near record grain stocks, higher interest rates, no new grain reserve allotments, and the lingering impact of the current truck strike. Here is how the outlook for 1979 compares with 1978 sales for some type of equipment: TRACTORS-The median forecast is for an increase in retail sales of 2.4 per cent to nearly 180,000 tractors, 4,300 more units than were forecast in January. Sales of wheel drive tractors of less than 100 horsepower were predicted at a record 102,000 units, about 500 units greater than last year's sales and more than 2,000 units more than was predicted in January. Sales of two-wheele drive tractors of more than 100 horsepower were predicted to increase by about 1,000 units above last year's 65,532.

Sales of four-wheel drive tractors were forecast to increase 9.8 per cent above last year's 8,744 units. SELF-PROPELLED COMBINES-The median forecast has been raised by nearly 1,000 units above the January forecast to a total of 31,250, still 0.8 per cent below last year's actual sales. TILLAGE EQUIPMENT Sales of moldbroad plows and disk harrows will nearly equal last year's sales of 33,200 units, and 56,000 units, respectively. Sales of field cultivators and chisel plows will increase between 7.5 and 8.8 per cent from 1978. HAY AND FORAGE EQUIPMENT Sales of conventional hay balers should about match the 21,000 units sold last year, while sales of large balers 200-pound bales and up are expected to rise by 8.1 per cent from the 18,500 sold last year.

Sales of forage harvesters, mower-conditioners, and grinder-mixers, are expected to top last year's sales. Sales of hay stackers are expected to drop 9.6 per cent. LAWN AND GARDEN EQUIPMENT Dollar volume is expected to increase 6 per cent from 1978. Germans buy 2d U. S.

insurer in 2 months A REDUCTION in freight service was announced Tuesday by the Chicago, Milwaukee, St. Paul Pacific Railroad because of tight diesel fuel supplies. Worthington L. Smith, president of the railroad, said the railroad's eommuter trains and Amtrak service would not be affected. Most of the proposed cutbacks In freight service will be in the Midwest, and will mean less frequent service because trains will be consolidated, Smith laid.

Despite the reductions, he added, the railroad will continue to maintain service on all its lines. "In some locations, we have only a few days' supply of fuel on hand," Smith said. THE RAILROAD'S major diesel fuel supplier notified it June 4 that this month's allocation of diesel fuel will be at 60 per cent of the same month last year, and the railroad was unable to find alternative sources. The proposed cutbacks, which will begin later this week, will vary by area depending upon the local supply of fuel, Smith said. The railroad normally uses 8 million gallons of diesel fuel a month.

other stockholders "not less than" $72.50 for their shares. Fidelity's directors already have approved the merger and will "strongly recommend" its acceptance by stockholders. The price of Fidelity shares has soared to around $04 in recent days on takeover rumors and junrped $19 after the acquisition was announced. Eight days earlier Fidelity stock was quoted at $36,875. Fidelity announced Monday that Allianz has agreed to buy alout 1.8 million shares, 35 per cent of the Fidelity stock outstanding, from chairman Michael J.

Collins, members of his family, end three directors. ALLIANZ IS PAYING $72.50 a share or $128 million for the block and says it plans to sign definitive merger agreement Friday offering NEW YORK API Alllani Versl- cherungs A.G., a large West German insurance company, is making its second U.S. takeover in as many months, agreeing in principle to buy the Fidelity Union Life Insurance Co. of Dallas for $370 million. Last month Allianz agreed in principle to buy Mutual of New York's 98 per cent Interest In the North American Life Casualty Co.

of Minneapolis fee 1M Bullion,.