Strong Capital Next to Fold Web Fund

Another one bytes the dust.

Strong Capital Management said Tuesday that it plans to merge the Strong Internet Fund into a broader technology fund, following a similar move announced by Merrill Lynch last week. Strong Internet will be closed to new investors Friday, and if shareholders approve, the fund will be combined with Strong Technology 100, which invests in about 100 large and mid-size tech stocks, later this year.

Industrywide, four Internet funds already have been liquidated as that sector of the stock market has been decimated in the last year, according to the research firm Morningstar Inc.: DeLeon Internet 100 last November, and so far this year, Zero Gravity Internet Fund, Internet Index Fund and StockJungle.com Pure Play Internet.

Some other funds have broadened their names and strategies almost as quickly as they jumped on the Net stock fad in 1999 and 2000: Westcott Nothing But Net, for instance, became Westcott Technology. But there are still 33 pure Internet stock funds, Morningstar said.

Strong Internet, whose shares have slumped about 64% since its Dec. 31, 1999, launch, has about $33 million in assets, said company spokeswoman Jody Lowe, compared with about $184 million in Strong Technology 100. The Internet fund had a peak of about $100 million in March 2000, before the tech sector began its collapse and Net stocks got pummeled especially hard.

Funds typically need at least $25 million to $50 million in assets to operate profitably, according to industry consultants.

Strong’s shareholders want more diversification than a narrowly focused Internet fund provides, according to Anthony J. D’Amato, an executive vice president at the Milwaukee-based firm.

“We are positive on the long-term outlook for technology,” D’Amato said. “But with the deterioration of Internet stocks, investors want a broader technology fund.”

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Net Loss

Shares of the Strong Internet stock fund, launched at the end of 1999, briefly soared with the final surge of tech stocks in early 2000 but have since crashed.

*

Strong Internet Fund, monthly closing share prices and latest

Tuesday: $3.67

Source: Bloomberg News