The San Francisco Examiner from San Francisco, California • 60

D-2 Sunday, November 28, 1999 SAN FRANCISCO EXAMINER A iedioll o( iIk Sn Fnuicaco Sunday Earning nd Chronitk the mediuml ypUB HOHEY SHOP. DON'T DR0P When WTO: Approach with great caution Wt. kiX. I isn the message If lWmmm i tries consider communal property. African activists have been especially outraged by TRIPS because it represents another form of the historical colonialism that already has Africa lagging from a development perspective.

Theoretically, a pharmaceutical company could patent a home remedy, then protest its sale by indigenous sources Disputes brought through the WTO are not adjudicated democratically, but by a secret, unelect-ed group of three trade experts who have the power to make binding decisions. Another WTO agreement, TRIMS, or Trade-Related Investment Measures, gives corporations more rights to their money without government interference and increases the amount of capital mobility that already exists while limiting government control of capital. Yet another, the WTO's Sanitary and Phytosanitary Standards (SPS) defines how much safety countries can have and determines whether safety hazards can be labeled. In this case, trade is seen as more important than caution or consumer protection. All in all, the WTO has intrusive powers.

It has improved the status of trade (with trade up 25 percent since the WTO's inception), but it has not improved the status of people. Still, the AFL-CIO, through its president, John J. Sweeney, has expressed some support for the U.S. agenda at the WTO. WhUe Sweeney has said that Seattle trade talks must include worker protections, his push to reform, not reject, the WTO has angered some of his members.

While the AFL-CIO has had two full-time organizers in Seattle for nearly a year and plans a rally in a stadium that holds 70,000 people, some activists say if the rally doesn't send a strong message about immigrant rights, child labor laws and other matters, it is simply posturing. Yet how can the WTO send a strong message about worker rights and child labor laws when many are pushing for the inclusion of China into the body? There are no independent trade unions in China. Activists there See MALVEAUX, D-7 HIS WEEK, the finance and trade ministers from 135 countries around the world will meet in Se attle at the World Trade Organization's Ministerial Meeting. The meeting's goal is to set ground rules for a round to negotiations on trade rules in agriculture, financial ser- vices, forestry and intellectual property. About 5,000 delegates will attend the meeting.

Thousands of activists from 1 JULIANNE MALVEAUX ON 1 labor, envi ronmental, development and social justice organ izations are also expected to converge on Seattle, with many hoping to stop a new round of trade liberalization. Those opposed to the WTO include activists from more than 500 groups in 63 countries. The 5-year-old WTO is flawed at its roots. It is a quasi-govern mental organization that can override the laws and treaties of nations in the name of free trade, making commerce our world's dominant value, and codifying the dominance of industrialized nations and their corporate powers over developing counties. In glob alizing commerce without globalizing popular power, the WTO creates a situation where profit is all that matters.

Once WTO agreements are signed, any domestic laws that are inconsistent can be invalidated. These can include labor laws, environmental protections, consumer safety laws, performance re quirements and others. Some of the agreements bla tantly pit industrial giants against developing countries. For exam- pie, TRIPS, the Trade-Related Intellectual Property Agreement, extends U.S. "first come, first patent" rules to the world.

Under TRIPS, a corporation can patent a strain of rice grown for hundreds of years in India, a medicinal plant from the Amazon jungles, and other things that some coun ECONOMY Ankie Schutema andson.Johnathan, flagship store on Market Street in San 3, above the many other holiday shoppers, Johnathan held onto his mother's hair for security. monitor holdings, and open and close accounts online. They want to send official documents by e-mail rather than waste postage and paper (though they will have to convince investors to accept documents electronically). Some fund firms are moving toward having their own Internet-based funds, either as a separate low-cost share class or for new funds within their existing family. In short, the big brand-name funds will soon offer everything of substance that you can find in these new online fund companies, plus a track record.

That raises the question of why an investor would buy into an un tested fund family for which the claim to fame is not investment prowess but reasonable skill at de veloping a Web site. Stockjungle.com's answer is that its Standard Poor's 500 In dex fund is absolutely free, with no expense ratio, because the firm is waiving its management fee. It's a loss-leader strategy similar to what many firms do with money-market funds in which management gives up some profit on one fund in order to get your attention and make money selling you its other offerings. But in a world where investment acumen is more important than marketing ability, even a free fund may not be enough. Russ Kinnel, senior editorial analyst at Morningstar noted that he "won't mind paying" the 0.18 percent expense ratio on the Vanguard Index 500 Trust "just to get Vanguard's customer service." That's before factoring in that Vanguard manager Gus Sau-ter has typically taken steps so that his fund tracks the index more closely than most others.

And while Vanguard's Web site may not be as'interactive as Stockjungle.com's, it has more and better investing information. Says Kinnel: "I don't see the appeal of going to some start-up outfit The thrill is in buying a fund that makes money, not buying one with a cool Web site." Stockjungle.com president Michael Witz says he expects his funds to prove themselves over time (what fund company president and notes that because his firm can generate revenues in other ways (such as selling ads on the Web site) it can keep costs down and still do things other funds can't. I didn't have the heart to break it to him, but Fidelity and many other fund groups make money in ways besides funds, too. That may explain why plenty of fund firms have expense ratios better than Trump's plan to tax the rich won't work OME 35 years ago, talking about television, Marshall McLuhan pointed out that "the medium is the mes sage." He might as well have been talking about the Internet, For some new fund companies, the Internet is both their medium their means of marketing and interacting with investors and their message (read: "We are the wave of thefu- There's only one little problem with that. The real message in fund investing is long-term results, not cool ways to interact with a fund company.

In fact, judging from how little atten CHARLES A AFFE IS 1G ALS tion most investors pay to prospectuses, proxies, and statements of additional information, the truth is that most investors could not care less about communications with their fund company so long as the numbers look good. That's not a great attitude, but it's worth acknowledging given the overhyped phenomenon of new Internet-based funds. Last week, Stockjungle.com opened a family of four self-pro-claimed "naked mutual funds," a sexy-but-meaningless way of sayr ing the funds take the wraps off portfolio moves by posting transactions and daily manager commentary. As noted previously in this column, OpenFund started doing the same thing in September. Another Web site, X.com, will soon unveil its fund family, and there are more to come.

The hype, of course, says these new funds are unique because of what they offer on the Internet. Strip away the bombast, however, and the real differences amount to all-electronic communications, plus some interactive online messaging, plus the instant portfolio disclosures (which actually could hinder the performance of these funds if they attract enough assets to grow big). Truth be told, all fund companies are moving fast toward offering Web services. They want investors to make transactions, it ft: 'T Flashcom Internet mm Toys Us, eToys not playing around -kb EXAMINERPENNI GLADSTONE checked for bargains at OldNaw's Francisco. Head and shoulders In other words, the super-wealthy would trade an up-front tax of 14.25 percent for elimination of the 55 percent estate tax.

Trump, who puts his net worth at approximately $5 billion, would himself pay about $712 million under his plan. 1 rump is tapping into the populist notion that the affluent are disproportionately benefiting from our booming economy while most others are sidelined. This is supported by recent reports that 20 ROBERT L. SOMMERS percent of the richest Americans now control 84 percent of the wealth. Put another way, the share of wealth of the bottom 80 percent has dwindled to 16 percent.

Efforts by the super-rich to cir cumvent Trump's tax by finding a loophole could be prevented by disregarding any transaction or transfer that would lower a person's wealth. Also, stiff penalties could be assessed against taxpayers and their advisors who improperly attempt to defeat the tax. The IRS and the courts are familiar with handling asset valuation issues because the proposed tax is similar to the present estate tax. If the national debt were eliminated, it's presumed that those who paid the tax would also benefit the most from the resulting long-term health of our economy. Under this assumption, not only would the super-wealthy swiftly make back the taxes paid, they, along with the rest of the population, would never pay estate taxes again.

There are three major problems with Trump's plan: First, it is doubtful that the super-wealthy actually control as much as $40 trillion of assets ($40 trillion 14.25 percent tax $5.7 trillion). The latest Forbes magazine report on the richest 400 Americans places their entire wealth at approximately $1 trillion. A rough guess as to the combined wealth of those affected by the tax might approach $6 tril- See SOMMERS, D-4) PROPHET 1 If ILLIONAIRE Donald Trump, a prospective Reform Party candidate, has dropped a political bomb on his fellow tycoons. He plans to tax their accumulated wealth and pay off the national debt in a single year. Trump has called for a one time 14.25 percent tax on the net worth of individuals and trusts worth $10 million or more.

Trump says this would gener ate $5.7 trillion in new taxes earmarked to eliminate the national debt. The savings in annual interest payments, which Trump estimates at $200 billion, would ensure the solvency of our Social Se curity system. Trump's proposal is intriguing because he would also eliminate estate taxes for everyone. Currently, estates greater than $650,000 are subject to estate tax, based on a person's wealth at death. short 0 0n selected plans.

"V-V I stores and I would see which, if any, was doing high-single-digit low-double-digit comparative store sales. I would call in those managers tonight and brainstorm with them. I would also close all stores that have negative comps or fire the managers and have winning managers from these positive stores oversee the changes. Then I would go nuts with the Web. I would offer massive discounts.

I would give stuff away. I would literally do everything I could to make it so eToys didn't have a good Christmas. I would be willing to lose millions trying to stop them. I would make this priority one. I would even allow people to return eToys' merchandise at Toys Us and get full price (really gutsy).

You see, the lesson of Amazon.com was that once you let the other guy win, there is no turning back. Toys Us stock already signals to this company that it has lost. It isn't like Toys Us management has anything worth preserving. But with less than a month to Christmas, Toys Us needs to show us what all of that marketing muscle and clout with distributors means. If it truly can undercut eToys as it says it does, it has to do so.

By a mile. It must pull out all of the stops. Most retailers can't afford to do this. Their stocks will get killed by an unforgiving Wall Street. But Toys Us is in that rare position of having a stock nobody cares See CRAMER, D-4 TOYS VS.

Toys Us. Let's face it: These guys are in the Clay-mation death match of a lifetime. Who's going to win? To me, this one's a lay-up: eToys, unless Toys Us does as I say. There is only one way for Toys Us to beat eToys. It has to join them.

I mention this battle because in the past few days I have been trashing the heck out of Toys Us, mostly because my kids spent a full day at Hamley's in London, which was one of those ex JAMES CRAMER periences that makes you never want to go back to that stupid Geoffrey Giraffe and his dollars that remind me of the coupons my great-grandfather used to save from the cartons of filter-free Raleighs. (Heck, he lived to 94; you got to hand it to that chain-smoker!) If I were running Toys Us, here is what I would do immediately. I would take my run of DISPATCHES FROM wm Access Up To 100 Times Faster. Let Flashcom savje you time and money. Digital Subscriber Lines offer the fastest most secure high speed Internet access available today.

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