The full-page ad in Money pops nicely: Strong Results puns the headline. (It’s an ad for Strong mutual funds.) What stands out is the block of boldfaced Morningstar stars. Center-stage there are 14 rows with room for a maximum of 5 bold stars on each row. Well, nine of 9 of the 14 rows have stars all the way across, and 5 fall just one star short.

This is some group of funds!

The other thing that pops are the three large bold #1‘s used to describe Strong’s two money market funds.

All 4’s and 5’s in the star department, #1’s in the money rankings department . . . Honey, maybe it’s time we called for a prospectus!

And maybe it is. I’m not suggesting Strong funds — or even the advertising for them — are unusually bad.

What concerns me is that — in this market particularly, when tens of millions of relatively new and unsophisticated investors have gotten into the game — not everyone will smile knowingly and dismiss most of this ad for the technically accurate but misleading hype that it is.

What makes it accurate is the little block of italicized fine print at the bottom. The type is small, none of it boldface, with more than 25 words to the line. (For readability, your newspaper has about 8 words to the line.) The two key pieces of information, naturally, come at the end.

The first: “This is a partial listing [of the Strong funds]. Other funds may have lower ratings.”

Well, and in fact (here’s a surprise) — they do have lower ratings! Morningstar sent me a current table with 24 Strong equity and bond funds. Of these, an impressive nine have 5 stars and five have 4 stars . . . but six have 3 stars (meaning they are about average), three have 2 stars (below average), and 1 has 1 star (the worst possible ranking).

This is still pretty good . . . though it should be noted that doing better than average (as 14 of the 24 funds did) does not necessarily mean doing better than the averages. The average mutual fund, against which the others are assessed in coming up with what is in effect the Morningstar bell curve, is handicapped by commissions, fees and expenses. The averages pay no such charges. Still, Strong’s results were strong.

Which leads me to the second key piece of footnoted information: “From time to time, the Fund’s advisor has waived its management fee and/or absorbed Fund expenses, which has resulted in higher returns and without these waivers the rankings may have been lower.” Of the 14 funds listed in the ad (plus the two #1-ranked money-market funds), 12 had an asterisk pointing to that footnote.

Could this have made a difference in, say, the #1 ranking of the Strong Investors Money Fund — one of the two funds in the box at the top of the ad subheaded: America’s #1 Money Funds? That fund was #1 in yield among 238 General Purpose money market funds against which it was ranked — “for the 7 days ended January 5, 1999” (my italics, not theirs). For just those 7 days? One wonders how it ranked for the previous and following 7 days? And whether the little asterisk may have meant that some fees were waived during that period to make the results look good.

I don’t want to make too much of this. You could do a lot worse than the Strong funds. And I do not envy the copy writer faced with the task of making one or another money market fund seem irresistible. They’re all so much alike (and the ones that do have the highest yield are usually the ones that have just a touch — a smidgen — of extra risk). It’s his job to put the best foot forward. But it’s our job to recognize that most of these critters have more than one foot.

It reminds me of the time Uri Geller drove me through the 79th Street Transverse — across Manhattan’s Central Park — blindfolded. Yes . . . he was blindfolded. Truly! The catch, in this case (because, especially when it comes to blindfolded driving, there’s almost always a catch), is that he could see. Nice guy, that Uri, and talented; but not all he cracked himself up to be.


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