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Kathy Panagopouloskathy.panagopoulos@morningstar.com
Most Funds Post Gains During First Quarter; Technology and Communications Funds Continue to Suffer Losses

CHICAGO, Mar 28, 2002 – Chicago-based Morningstar, Inc., a global investment research firm, today released its first-quarter mutual fund summary in its special Quarter In Review section on the firm's investment Web site, http://www.morningstar.com.

"Most stock and bond mutual fund categories posted gains in the first quarter of 2002, though technology and communications funds continued to suffer significant losses," said Russel Kinnel, director of fund analysis for Morningstar. 

First Quarter 2002 Fund Performance Highlights
(data through Wednesday, March 27):

  • The precious-metals category was the top-performing fund group, rising more than 35 percent.   
  • Every international equity fund category saw an increase, with the diversified emerging markets and Pacific Asia/ex-Japan categories rising nearly 14 percent and 12 percent, respectively.   
  • Worries about oil supply disruptions in Iraq and Venezuela drove up natural resources sector funds 11 percent, making it the best-performing domestic-stock fund category of the quarter.   
  • Technology and communications funds continued to suffer, dropping nearly 10 percent and 18 percent, respectively.    
  • Emerging-markets bond funds led all fixed-income categories, gaining more than 6 percent for the year to date. 

Top-Performing Funds
Kinnel added, "Precious-metals funds occasionally have their moment in the sun, but their long-term returns are still weak."

Top-performing gold funds included U.S. Global Investors Gold Shares (USERX) and First Eagle SoGen Gold (SGGDX), which both gained more than 42 percent for the quarter through March 27. 

Within the best-performing domestic-stock fund category, natural-resources sector funds Ivy Global Natural Resources (IGNAX) and Prudential Natural Resources (PGNAX) increased more than 23 percent and nearly 17 percent, respectively, for the quarter.

The growing prospects for an improved economy, which could increase demand for real estate and bolster occupancy rates, helped real-estate sector funds gain more than 8 percent through March 27. Homebuilder and hotel chain stocks, which have risen this year, also helped funds like CGM Realty (CGMRX) jump 16 percent and Alpine U.S. Real Estate Equity (EUEYX) gain more than 14 percent.

International equity funds increased 4 percent for the quarter, as enthusiasm for such countries as Korea, Thailand, Singapore, Mexico, and Brazil grew. GMO Evolving Countries III (GMCEX) and Matthews Korea (MAKOX) led the charge, gaining nearly 22 percent and 31 percent, respectively. 

Emerging-markets bond funds also did well--leading all fixed-income fund categories with an increase of nearly 7 percent through March 27. Many funds in the category got a boost from strong performances in such favored markets as Mexico. International Monetary Fund reforms helped a few markets, like Equador, and resilient oil prices lifted Russian and Nigerian bond markets. Scudder Emerging Markets Income (SZEAX) and Phoenix-Goodwin Emerging Markets Bond (PEMAX) led the category, gaining 9 percent during the period. 

Bottom-Performing Funds
A prolonged capital spending drought, as well as uncertainty about technology stocks' earnings growth, continued to hurt communications and technology funds. Firsthand Communications (TCFQX), which focuses on suppliers of cutting-edge telecommunications gear, and ProFunds Ultra Wireless Services (WCPSX), which targets wireless service providers, each took beatings this quarter. Firsthand lost more than a fourth of its value and ProFunds shed more than 61 percent.

Van Wagoner Technology (VWTKX) and Firsthand Technology Innovators (TIFQX), which hold concentrated portfolios of small, speculative technology stocks, fell the hardest among technology funds. Both lost more than 23 percent through March 27.

A strong dollar threw international bond funds to the bottom of the fixed-income pile, and rising yields and plummeting prices hampered long-term government and corporate bonds. 

The more interest-rate sensitive a government bond's portfolio, the worse it performed during the quarter. Long-term bond funds, such as Strong Corporate Bond (SCBDX) and Alliance Bond Corporate Bond (CBFBX), performed poorly, each dropping almost 3 percent. 

For the most current data on more than 13,000 funds and 7,000 stocks, as well as in-depth analysis on the quarter's top investing news, go to Morningstar's Quarter In Review section:

To read the "First Quarter in Funds" article, go to:

To read the "First Quarter in Stocks" article, go to:

Editor's Note: If you are interested in receiving weekly, monthly, and quarterly e-mails on stock and mutual fund data, contact: Annette Larson, Morningstar Media Relations, annette.larson@morningstar.com. Preliminary quarter-end data will be distributed Monday, April 1, 2002.

About Morningstar, Inc.
Chicago-based Morningstar, Inc. is a global investment research firm, offering an extensive line of print, software, and Internet-based products and services for individuals, financial advisors, institutions, and the media. The company is a trusted source for investment information, data, and analysis of stocks, mutual funds, exchange-traded funds, closed-end funds, and variable annuity/life subaccounts.

Morningstar.com is listed among the top investing sites by publications such as The Wall Street JournalBarron'sWorth, and U.S. News & World Report. Morningstar provides investment information for a number of leading Web sites, including Microsoft MoneyCentral, Quicken.com, America Online, Yahoo! Finance, and Netscape Personal Finance.

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