May 7, 2003 — It may not be back to the races, but a successful conclusion to the war with Iraq has apparently left U.S. stock funds feeling fairly good.

So far this year, the main domestic equity fund categories are comfortably in solid territory, with April results looking especially strong. “In April, most investors saw the Iraqi war was over quicker than they thought, so the war won’t have a negative impact on the economy,” said Sam Stovall, chief investment strategist at Standard & Poor’s.

After the war ended, investors realized that earnings were pretty healthy, and the economy was improving, Stovall noted. In the April post-war rebound, value stocks led over growth stocks, which was unexpected, he added, since growth stocks tends to outperform after a bear market is over. He thinks these unlikely results may stem from the unusual nature of the recent bear market, which was longer, and deeper, than most downturns.

Going forward, Stovall expects more traditional market patterns to emerge, with small-cap growth stocks leading, as investors look to an expanding economy, and improving earnings. Growth funds have been outperforming so far this year through April, but larger caps have generally held up better than small caps. Larger-cap companies may be benefiting from the weaker dollar, since larger companies tend to be bigger exporters. Concerned about volatility, investors may also be favoring more relatively stable large-cap companies.

While it’s “possible” that recent market gains are a bear market rally, Stovall believes stocks are poised for “the beginning of a new bull market.” He notes that Standard & Poor’s investment policy committee expects the S&P 500 to reach 985 by year end, which would be a 13% rise for this year overall.

Fund Investment StyleAverage Returns For 2003 Through 4/30/03 (%)

  • Large-Cap Growth +5.66%
  • Large-Cap Value +2.95%
  • Large-Cap Blend +4.35%
  • Mid-Cap Growth +5.19%
  • Mid-Cap Value +2.90%
  • Mid-Cap Blend+4.33%
  • Small-Cap Growth+4.01%
  • Small-Cap Value +2.88%
  • Small-Cap Blend +3.35%
  • Domestic Equity Funds*+4.21%
  • S&P 500+4.70%

Fund Investment StyleAverage Returns April 2003 (%)

  • Large-Cap Growth +7.24%
  • Large-Cap Value +8.21%
  • Large-Cap Blend +7.81%
  • Mid-Cap Growth +6.96%
  • Mid-Cap Value +7.71%
  • Mid-Cap Blend+7.53%
  • Small-Cap Growth+8.15%
  • Small-Cap Value +8.72%
  • Small-Cap Blend +8.32%
  • Domestic Equity Funds*+7.79%
  • S&P 500+8.11%

Domestic Equity Funds*

Best Performers2003 Returns Through 4/30/03 (%)Worst Performers2003 Returns Through 4/30/03 (%)

  • Large-Cap Growth Reynolds Fund (REYFX) +20.1%Midas Special Equities Fund (MISEX) -6.8%
  • Large-Cap Value Dreyfus Premier Strategic Value Fund/A (DAGVX) +10.0%Liberty Growth & Income Fund/C (CFGDX) -3.2%
  • Large-Cap Blend American Eagle Twenty Fund (AETWX) +16.9%GAM American Focus Fund/C (GNACX) -1.0%
  • Mid-Cap Growth Legg Mason Inv Tr: Opportunity Tr/Prim (LMOPX) +18.6%Ameritor Investment Fund (AIVTX) -7.9%
  • Mid-Cap ValueNeuberger Berman Focus/Investor (NBSSX) +12.8%FMC Strategic Value-2.1%
  • Mid-Cap BlendFidelity Leveraged Company Stock (FLVCX) +22.8%Harbor Mid Cap Value Fund/Ret (HRMVX) -3.8%
  • Small-Cap GrowthApex Mid Cap Growth Fund (BMCGX) +41.7%Frontier Equity Fund Portfolio (FEFPX) -38.5%
  • Small-Cap ValueFBR Small Cap Value Fund/A (FBRVX) +14.3%ICM/Isabelle Small Cap Value Fund/Invest (IZZYX) -6.2%
  • Small-Cap BlendBridgeway Fund: Ultra Sm Company Port (BRUSX) +15.2%Pioneer Small Company Fund/C (PCSCX) -3.5%

Domestic Equity Funds*

Best PerformersApril 2003 Returns (%)Worst PerformersApril 2003 Returns (%)

  • Large-Cap Growth Reynolds Fund (REYFX) +21.6%Value Line US Multinational Company Fund (VLUMX) +0.7
  • Large-Cap Value Muhlenkamp Fund (MUHLX) +14.1%AmSouth Mutual Fds Moderate Grth & Inc/B (AMMDX) +3.7%
  • Large-Cap Blend ProFunds: UltraBull ProFund/Inv (ULPIX) +16.3%Jundt Twenty-Five Fund/A (JTFHX) +1.8%
  • Mid-Cap Growth ProFunds: UltraMid Cap ProFund/Inv (UMPIX) +14.3%Millennium Growth & Income Fund (MGIQX) -0.2%
  • Mid-Cap ValueNeuberger Berman Focus/Trust (NBFCX) +17.3%Gintel Fund (GINLX) +1.6%
  • Mid-Cap BlendFidelity Advisor Leveraged Company Stock/A (FLSAX) +18.5%Banknorth: Small Mid Cap Core Fund (BNSMX) +2.9%
  • Small-Cap GrowthApex Mid Cap Growth Fund (BMCGX) +24.4%Frontier Funds: Equity Fund Portfolio (FEFPX) -23.8%
  • Small-Cap ValueAmeristock Focused Value Fund (AMFVX) +16.1%Franklin MicroCap Value (FRMCX) +2.1%
  • Small-Cap BlendUndiscovered Managers Small Cap Growth/Instl (USRLX) +15.0%Hussman Strategic Growth Fund (HSGFX) +1.8%

*Excluding sector and balanced funds.

Source: Standard & Poor’s. Total returns include reinvested dividends. Data as of 4/30/03.