History Shows Risks Associated With Funds Launched in 'Hottest'
 Sectors of the Market, Says S&P

    NEW YORK, June 27 /PRNewswire/ -- While long-established mutual funds like
Fidelity Magellan (FMAGX) and Washington Mutual Investors Fund (AWSHX) remain
the cornerstone of many investors' portfolios, the mutual fund industry never
seems to tire of launching new funds, particularly those coming out of the
hottest sectors of the market.  Through May 30th, 157 new open-end funds have
been registered with the Securities & Exchange Commission, according to
FundFiling.com.  Of the new registrations, nearly 60% were equity funds and
32% were bond and money market funds (8% were balanced and hybrid funds).
These new fund filings are in direct contrast to what occurred in year 2000,
where only 15% of the funds launched were bond and money-market funds --
indicating a trend for fund companies to launch new funds in the hottest
sectors of the market.  Realizing this tendency, Standard & Poor's web based
service, Fund Advisor, recently took a step back into time and looked at the
history of new fund launches coming out of the hottest sectors of the market
and the risks they have presented to investors.
    According to Fund Advisor's research, the history has demonstrated the
risks involved in snapping up new funds, concentrated in one sector of the
market, as they roll off the assembly line.  When gold prices skyrocketed
toward $800 an ounce in May of 1980, the industry produced a flurry of new
gold funds just in time for the metal's slide in price.  In the late 1980s,
Japanese funds were all of the rage.  Since the Japanese market bubble burst
in 1989, analysts say investors have made more on currency gains than through
the stock investments themselves.  A similar pattern was seen in the wake of
Wall Street's infatuation with emerging markets in the mid-1990s, ending
abruptly with the emerging markets crash in 1997.
    The most recent example is also the most dramatic: the short-lived
infatuation of investors and mutual fund companies for "new economy" funds
investing in Internet, technology and telecommunications stocks.  For a time,
funds that invested heavily in the technology sector and other high growth
areas, such as funds managed by Janus flourished.  But like many other funds
that concentrate in a particular sector, many "new economy" funds launched at
the height or near the tail end of the Internet run up proved to be disastrous
investments for many as the NASDAQ fell 78% from its March 2000 peak.  A case
in point was Internet funds.  Launched just as the market peaked in March
2000, Internet funds raised billions of dollars for many funds companies, only
to have many of the funds fold 18 months later.  According to Standard &
Poor's mutual fund database, U.S. technology funds returned an average of
23.65% through the first two months of year 2000.  The same set of funds lost
an average of 43.53% from March 1, 2000 through December 31, 2000.
    "It is critical that investors exercise caution when considering investing
in funds launched in hot sectors of the market, as the hottest sectors of the
market often cool off quickly," explains Gary Arne, Standard & Poor's Managing
Director of Funds Research.  "Fund companies understand that investors have a
tendency to chase returns as well as jump on the best performing sector's
bandwagon."
    "Obviously, any fund that takes on a high concentration in one particular
area of the market can be a very risky investment," continues Arne.  "Mutual
fund investors need to perform their due diligence, and understand the risks
and return opportunities the fund offers based on its investment objectives,
as well as the past history of the sector that they are investing in."
    The tables at the bottom of this release show the breakdown of new fund
filings through May 30, 2003 as reported by FundFiling.com.

     Equity Fund Style                 Number of New Funds Registered Through
                                       May 30, 2003
     Growth Funds                      32
     Small-Cap Funds                   15
     Aggressive Growth Funds           13
     International Equity Funds        11
     Mid-Cap Funds                      9
     Growth & Income Funds              7
     Principal Return                   4
     Global Asset Allocation            2
     Global Total Return Int'l          1
     Convertibles                       1

     Fixed Income Fund Style           Number of New Funds Registered Through
                                       May 30, 2003
     General Corporate                  6
     Intmd Maturity Taxable Bd Short    6
     Short Maturity Taxable Bd Short    6
     High Yield Corporate               5
     Municipal                          3
     Medium Quality Corporate           2
     Govt Bonds                         2
     High Quality Corporate             1
     Prime Rate Taxable Bd Short        1
     Global Bond                        1

     Money Market Fund Style           Number of New Funds Registered Through
                                       May 30, 2003
     Money Market Funds                18

     Balanced/Hybrid Fund Style        Number of New Funds Registered Through
                                       May 30, 2003
     Balanced Hybrid                    8
     Flexible US Hybrid                 2
     Income-Mixed Hybrid                1
     Source:  FundFiling.Com

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