In terms of industry growth, last year surpassed even our most optimistic expectations which had assumed only moderate gains in U.S. stocks. Less visible but very important to our future forecast was equity appreciation overseas surpassing U.S. results, with large price gains in markets like Japan and Latin America. Also illustrating the widening of the fund industry base was a sizeable increase in money market funds. Very quietly, liquid assets rose significantly in 1999, fostered by wealth buildup, portfolio re-balancing, and the search for defensive investments. Last year also witnessed interesting developments in the way industry firms are doing business with customers and in the areas of pricing and distribution.
Most investors assume today that any market break is temporary .
That clearly has been their actual experience for almost two decades. Throughout the late 1990s, investors have seen many drops in stock prices followed by fairly quick recoveries. All this suggests that when stock prices fall continuously, a possibility suggested by post-Y2K interest rate spikes, the decline in commitment to equity investments will be slow. Each year, your firm offers several market outlooks based on how the economy fares. Our investment outlook is even more tempered than in recent years.