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A fund combining Ma Bell's new brood: how good?

By Thomas WattersonBusiness correspondent of The Christian Science Monitor / July 20, 1983

For some 3 million AT&T stockholders, the end is near. The official ''breakup'' of the American Telephone & Telegraph Company is only a few months away - New Year's Day, to be exact.

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After that date, AT&T shareholders will be given one new share in each of the seven new regional phone companies for every 10 shares they now hold. These will be added to the 10 shares they will still own in the then-independent parent. The total package of shares is expected to be valued by the market at about the same amount as before the breakup - at least at first.

Then, stockholders can hold shares in both the parent company and the regional companies, or they can sell their shares in any companies that are not doing well.

Or, before the end of the year, they can sell their AT&T stock, sit on the sidelines until the strongest of the eight new pieces emerge, and invest in those companies later.

Now, a third option has been introduced by four major brokerages, led by Merrill Lynch, Pierce, Fenner & Smith Inc. The option, called the Equity Income Fund, is a unit trust, similar to a mutual fund. To receive one share of the new fund, the investor will trade in one share of his AT&T stock. This way, Merrill Lynch says, the stockholder can ''keep the phone company together'' by having a portfolio of eight stocks representing the same pieces that existed before the breakup.

Joining Merrill Lynch in offering the trust are Dean Witter Reynolds Inc., Prudential-Bache Securities Inc., and Shearson/American Express Inc.

For a time, a Merrill Lynch spokesman says, the fund will not be managed, that is, if the original parent company or one of the new regional companies starts to perform badly, it will not be sold out of the portfolio.

There are several advantages of the ''phone fund,'' Merrill Lynch says, including:

* The investor will own all eight of the current Bell System companies in the same 1-for-10 proportion of the reorganization.

* All or some of the fund units can be sold without paying a brokerage commission or odd-lot penalty. Shares can be sold through a secondary market maintained by the four sponsors.

* You do not have to keep track of stock certificates and quarterly dividend payments from eight different companies (32 checks in all), each paying different-size dividends at different times. You will receive one single monthly check representing the entire portfolio, or you can have the dividends reinvested.

''I think it's very good for anybody that wants to maintain the same ownership they now have,'' Jack W. Swensen, an investment counselor in Weston, Mass., said of the fund.

Investors who do not want to maintain equal ownership of all eight pieces, however, or who suspect the package will not perform as well as the original whole, will probably avoid this fund.

So here are the three choices: Take the shares offered by AT&T; sell out before Jan. 1 and join the many investors who are trying to figure out which parts will do better and then reinvesting accordingly; or take the Merrill Lynch offer, which involves a commission, in effect, of 1.5 percent.