More Bad News For MK High Income and Intermediate Bond Fund Shareholders
If you own one of these funds you probably know that Morgan Keegan's High Income and Intermediate Bond Funds crashed and burned in 2007, losing over 50% of their value in a year. The problem began when the value of the funds' assets (which included lots of securities tied to toxic subprime mortgages) collapsed. At that point hordes of understandably anxious fund owners said "enough" and began redeeming their shares , forcing the funds to sell assets for cash. The rush to the exits hardly slacked off in August when the Morningstar mutual fund newsletter questioned whether either fund could recover from their losses. Morgan Keegan's solution to the "problem" of shareholders who want their money back came on March 4, 2008, when the funds amended their prospectus to give them the right to limit the amount of cash paid on redemptions. In fact, Morgan Keegan now claims the right to require redeeming shareholders to accept the funds' securities in place of cash. So if you have ever wanted to own your own collateralized debt obligation, this could be your chance. And if that sounds good, there's a bridge in Brooklyn you might consider buying.
Brian N. Smiley
