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Subject: Finance - January Mutual Fund Report
Date: 02/10/1999
* Four weeks ending January 29, 1999
Performance
(Annl.)
SYMBL SECURITY SECTOR CLOSE 4 Week* 1 YR. 3
YR.
----
Mutual Fund Sector/Market Benchmarks Jan.
Domestic Hybrid......................... +1.4% +13.1%
+14.6%
Small Growth............................ +3.0% +10.1%
+12.8%
Dow Jones............................... 9,359 +2.0% +20.5%
+22.4%
S&P 500................................. 1,280 +4.2% +32.5%
+28.5%
Nasdaq.................................. 2,506 +14.3% +54.7%
+33.2%
Russell 2000............................ 427 +1.3% +0.3%
+12.1%
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Monthly Performance Review
Mutual funds posted solid gains in January, continuing a rally from
the late-year surge in 1998 as Wall Street waded its way through the
fourth-quarter earnings season. Stock splits by major players, such as
Intel, Microsoft, and IBM, and a slew of merger announcements were
among the events moving stocks last month. Led again by initial public
offerings from the red-hot Internet sector, the technology-laden
Nasdaq Composite index gained 14.3% in January, far outpacing the 2.0%
rise by the blue-chip Dow Jones Industrial Average.
Funds specializing in technology stocks gained a furious 15.3% for
January, easily surpassing the average U.S. diversified stock-fund's
increase of 2.3% and the 4.2% advance of the benchmark Standard &
Poor's 500-stock index, according to fund-tracker Morningstar, Inc.
The average technology fund is up 70.1% over the past 12 months,
compared with 17.6% for the average U.S. stock fund and 32.5% for the
S&P 500.
Mutual funds investing in "growth" companies again fared far better
than their "value" investment counterparts in January. "Large growth"
funds averaged a 6.5% gain, while the average small-cap growth fund
jumped 3.0%, according to Morningstar. This compares with a 0.9%
return for "large value" funds and a 1.3% loss for "small-cap value"
funds. Most "value" funds concentrate mainly on companies with low
price-to-earnings ratios, translating to smaller technology holdings
and, consequently, lagging performance over the past 12 months.
In addition to the technology fund sector, those funds specializing in
communication companies excelled (gaining 12.2%) pushed higher by the
$66.5 billion merger between U.S. wireless phone company AirTouch
Communications and Britain's Vodafone Group Plc. Among other funds
specializing in specific industries, those investing in natural
resources and real estate pulled in some of the worst returns for the
month, losing 4.4% and 2.0%, respectively.
Money flowing into stocks was fueled by a selloff in bonds as
investors, feeling more confident, put their cash into more aggressive
stock-based funds. Bond funds did manage small returns, with long-term
bond funds inching up 0.8%. Those focusing on high-yield bonds fared
modestly better, gaining 1.5%.
Among international equity funds, those investing predominately in
Latin American stocks were the big percentage losers, down 13.0%, on
the heels of Brazil's decision to devalue its currency. Stock funds
investing overseas were narrowly mixed as the launch of the euro, the
single European currency, had little effect on the market. European
funds rose 0.2%, while those investing in Japan gained 1.6%. Funds
investing in the Pacific region and Asia, excluding Japan, fell 4.2%.
Overall, the average foreign stock fund gained 1.0% in January.
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