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|  | SEPTEMBER 9, 2005
 MUTUAL FUND SCOREBOARD UPDATE By Angelina Dance The Street's Triple SlamHigh oil prices and rising rates had already crimped stock prices in August -- then came KatrinaReflecting a stock market that turned negative amid rising energy prices in August, the average domestic equity fund retreated 0.9% for the month, vs. a 1.1% loss for the Standard & Poor's 500-stock index. All domestic equity style categories ended August in negative territory. Small-cap growth funds ranked last, losing on average 1.4%, while all-cap value portfolios showed the narrowest decline, edging down 0.4%. Value-oriented funds suffered slightly less than their growth counterparts, declining 0.7%, vs. a loss of 0.9% for growth funds. However, year-to-date, all style categories are in the black, with the mid-cap value showing the best performance with a gain of 6.4%. (For complete results of more than 5,000 funds, see BW Online's Interactive Mutual Fund Scoreboard.) OVERALL IMPACT. August's top-performing individual equity fund, the $62-million Scudder Commodity Securities Fund/A (SKNRX ), soared 9.2%. This fund invests in both the commodities markets directly (through the use of GSCI-linked notes, as well as derivative instruments) and in the stocks of companies that find, develop, or produce commodities. Launched in February of this year, the fund is managed by Theresa Gusman, Terence Brennan, and Jeffrey Saeger of Deutsche Asset Management. As of June 30, the Scudder fund had 56% of its assets invested in energy and 42% in materials. The top five holdings comprised Exxon Mobil (XOM ), 4.4%; Dow Chemical (DOW ), 2.3%; Shell Transport & Trading Co., 2.2%; BP (BP ), 2.2%; and Chevron (CVX ), 2.0%. While the energy sector flourishes amid historic high crude oil prices, the remaining parts of the market are worried about the impact of these high prices on overall economic growth. Indeed, aside from the booming energy sector, all of the S&P 500 GICS Sectors posted broad losses for the month, with materials (-5.3%), telecommunication services (-4.8%), and consumer discretionary (-4.2%) incurring the biggest declines. OIL WATCH. At the very end of the month, Hurricane Katrina pounded the coast of the Gulf of Mexico with devastating force, causing catastrophic damage and thousands of estimated deaths in Louisiana, Mississippi, and Alabama. The Insurance Information Institute estimates that claims arising from the hurricane could top $25 billion, potentially making it the costliest storm in U.S. history. Despite the fears raised by Katrina, Standard & Poor's Investment Policy Committee (IPC) believes the resilience of the U.S. equity markets in the face of the hurricane has been impressive. "We think equity prices may work higher in response to less than expected damage to oil facilities or the prospect of a quicker end to rate hikes." The IPC currently forecasts that the S&P 500 Index will close the year at 1270, representing about a 5% gain for calendar 2005. Investors will likely keep their eyes focused on the price of oil. Crude oil futures reached as high as $70.90 on threats that Katrina would halt production in the Gulf of Mexico. Oil prices later pulled back after Washington announced it would release supplies from the nation's Strategic Petroleum Reserve. Standard & Poor's and Global Insights project that oil prices will trade as high as $70 to $75 in the near term, but close the year near the prestorm target of around $62 and decline to $52 by yearend 2006. FED WARNINGS. In addition, during August, investors weighed comments by Federal Reserve Chairman Alan Greenspan, who warned about the risks to the economy posed by the trade and budget deficits. He also warned that the housing boom represents an economic imbalance that could end badly for the economy. This came after sales of new U.S. homes soared by 6.5% in July to a record seasonally adjusted annual rate of 1.41 million. The IPC is maintaining its yearend 2005 fed funds rate and 10-year note yield targets of 4.25% and 4.75%, respectively. Below is a list of the best- and worst-performing domestic equity funds by style category for August.
And here are the funds ranked the highest by BusinessWeek and their 5-year annualized pretax returns through August.
 Dance is an analyst for Standard & Poor's Fund Advisor All of the views expressed in this research report accurately reflect the research analyst's personal views regarding any and all of the subject securities or issuers. No part of analyst compensation was, is or will be, directly or indirectly related to the specific recommendations or views expressed in this research report. Standard & Poor's Regulatory Disclosure Any advice, analysis, or recommendations contained in articles labeled "Insight from Standard & Poor's" reflect the views of Standard & Poor's, which operates separately from and independently of BusinessWeek Online. It is possible that BWOL may from time to time publish information that is not consistent with advice, analysis, or recommendations that are published by Standard & Poor's. Standard & Poor's and BusinessWeek Online are each units of The McGraw-Hill Companies, Inc.
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