Mutual Fund Research Newsletter
Aug 27, 2004 (#86)

Dear Subscriber:

My research continues to show that,
while it is nearly impossible to advise people accurately as to
what funds will do well over periods of less than a year, the
same is not true over longer periods.

Here is further evidence: Take a look at our specific recommendations
made a little over 1 year ago on June 30, 2003 at

  http://home.att.net/~funds-newsletter/stocktalk43.htm

As of yesterday, Aug 26, the one year return for the Vanguard 500
Index was 12.64 and the one year return for the Vanguard Total Bond
market index was 5.82. Both of these are among the best funds for
buy and hold investors.

However, over the last year, here's how my recommendations made 
at the beginning of the 3rd Qtr '03 did by contrast:

Stock Fund Returns (vs. 12.64 benchmark)

Vanguard Windsor                16.86
Vanguard Emerging Markets Index 22.18
Fidelity Low Priced Stock       18.92
Vanguard International Growth   19.76
Vanguard Total Stock Market Idx 12.98
T Rowe Price Equity Income      17.12
Janus Fund                       6.16

Bond Fund Returns (vs. 5.82 benchmark)

Vanguard High Yield                    11.86
American Century International Bond    13.99
PIMCO Total Return Instit.              7.01
Vanguard Inflation Protected Securities 9.84
Vanguard Short Term Corporate           3.15

So, for both stocks and bonds, all but 1 fund in each list did better
than the index funds. (And my underperformers were only
a small 10% recommendation for stocks and bonds, respectively.)

Our current recommendations do not differ greatly from our
recommendations made in our June '04 newsletter or even those
we made in April -   see http://home.att.net/~funds-newsletter/2004_2.htm

Large cap growth is still underperforming, and we are watching
to see if we might have been too positive about that category - but
we still are fairly optimistic it will do better than most categories
soon. And small caps are starting to fade just as we have been
suggesting for a while now. Finally, bonds have still been doing
OK although we are still thinking they will start to not do as well as
stocks for the rest of the year. As for cash, we still don't advise
more than 5-10% there.

If you have any thoughts on various investments' prospects or
on the content of this update, let me know.

Regards,
 
Tom Madell, Ph.D.
Publisher
Mutual Fund Research Newsletter
http://funds-newsletter.com
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"Your source for mutual fund advice"