The Big Screen: Fund World's Century Club Was Full of False Profits

Next time you see a white-hot fund and reach for your checkbook, remember the Century Club -- the fund world's Alamo.

The club comprises more than 180 stock funds that rode the tech-media-telecom and Japan tigers to gains north of 100% in 1999. The club swallowed up much of the record billions that gushed into stock funds last year.

Unfortunately, that money showed up just in time for a sagging economy and shriveling corporate profits to send nearly all of these funds careening back to Earth. Today the Big Screen is sifting the club, looking at how the biggest and the best performers in 1999 have fared since.

The upshot: The tattered club should stay in the minds of fund investors and fund marketers alike, as a reminder of what happens when the former chase performance and the latter chase sales.

The 10 biggest members of the club rose 117% on average in 1999, compared to a 21% gain for the poor old S&P 500, according to Chicago-based research house Morningstar. But over the past year these tech- and tech-heavy growth funds have lost more than a third of their value, compared to a 12.6% fall for the S&P 500.

If you sunk $1,000 into each of these 10 funds at the start of last year, you would have had less than $4,880 of that on Nov. 1.

1999's Biggest Highfliers The Century Club's 10 biggest members haven't weathered the storm too well
Fund	One-Year Return	1999 Return	Value of $10,000 Invested Jan. 1, 2000
(FDEGX)Fidelity Aggressive Growth	-50.5%	103%	$3,459
(TVFQX)Firsthand Technology Value	-48.1	190.4	5,784
(JAENX)Janus Enterprise	-44.5	121.9	3,870
(PRSCX)T. Rowe Price Science & Technology	-43.8	101	3,430
(FSPTX)Fidelity Select Technology	-36.2	131.7	4,036
(JAOLX)Janus Olympus	-36.2	100.1	4,686
(ACEGX)Van Kampen Emerging Growth	-33.5	103.7	5,256
(UNSCX)Waddell & Reed Advisor Science	-17.6	102.9	6,483
(FMILX)Fidelity New Millennium	-17.5	108.8	6,393
(FSELX)Fidelity Select Electronics	-14.1	106.6	5,789
S&P 500	-12.6	21	7,366
Nasdaq 100	-37.2	N/A	3,710
Source: Morningstar. Returns through Dec. 17. Account value through Oct. 31.

A list of the 10 biggest club members includes three of last year's top 10 selling funds: (FDEGX)Fidelity Aggressive Growth, (JAENX)Janus Enterprise and (ACEGX)Van Kampen Emerging Growth. All told, the trio took in nearly $17 billion last year; the average U.S. stock fund has just $300 million in total assets.

The list also includes high-profile tech funds, including the two largest tech funds out there: the $3.9 billion (PRSCX)T. Rowe Price Science & Technology fund and the $1.5 billion (TVFQX)Firsthand Technology Value fund. They're both down more than 40% over the past 12 months, like many of their peers.

How far have these funds fallen? Even if you'd bought shares early in 1999, many would still have left you in the red. If you invested $10,000 in the Fidelity Aggressive Growth fund at the start of 1999, for instance, your investment would have been worth less than $7,000 on Nov. 1. The same goes for T. Rowe Price's tech fund.

You might think that if you'd had the prescience to buy shares of 1999's highest fliers before their collapse, you'd be in the black. But that's not necessarily the case. If you had sunk $10,000 into the (VWEGX)Van Wagoner Emerging Growth fund at the start of 1999, prior to its stunning 291% gain that year, you'd be out some $800 at the start of last month.

The list of 1999's best performers isn't a pretty picture now. On average they rose 300% back then, but these funds are down 45% over the past year. If you built a portfolio of these funds, spreading $10,000 among them halfway through their blowout year, you'd have had less than $7,000 at the start of last month.

1999's Fading Stars Talk about high highs and low lows
Fund	1999 Return	One-Year Return	Value of $10,000 Invested Jan. 1, 2000
(NGTIX)Nicholas Applegate Global Technology	493.7%	-55%	$2,725
(WJSAX)CS Warburg Pincus Japan Small Company Growth	329.7	-36.1	2,118
(MSCGX)Morgan Stanley Small Cap Growth	313.9	-20.8	7,021
(VWEGX)Van Wagoner Emerging Growth	291.2	-65.4	2,351
(NEVIX)Nevis	286.5	-48	3,344
(MFITX)Monument Digital Technology	273.2	N/A	1,577
(DRAPX)Driehaus Asia Pacific Growth	264.5	-23.5	5,288
(WPJAX)CS Warburg Pincus Japan Growth	260.3	-39.5	2,176
(ATCHX)Amerindo Technology	248.9	-60.3	1,212
(PBTCX)PBHG Technology & Communications	243.9	-58.2	2,390
S&P 500	21	-12.6	7,366
Nasdaq 100	N/A	-37.2	3,710
Source: Morningstar. Returns through Dec. 17. Account value through Oct. 31.

Beyond their steep losses, these funds have also illustrated the management volatility that comes when a fund takes off and craters. The Fidelity Aggressive Growth fund's manager, Erin Sullivan, bolted with a bubble-boosted resume to start her own hedge fund on Valentine's Day last year. Since then, new manager Bob Bertelson has fallen harder than even most of his growth peers. The fund has lost nearly half its value over the past 12 months, trailing 98% of its competitors, according to Morningstar.

The (PBTCX)PBHG Technology & Communications fund is on its fourth manager since the start of 1998, but the best example of these funds' shaky DNA might be the Monument Digital Technology fund. In 1999 it was called the Monument Internet fund, and its 273% gain beat all other Net funds. Then the fund lost its manager, broadened its strategy, changed its name and was finally sold to Orbitex Funds, which has called it the Orbitex Info-Tech & Communications fund. Due to all these shifts, its one-year performance isn't listed in Morningstar's online database, but it fell 57% last year and an added 62% in the first 10 months of this year.

Obviously these funds haven't worked out for investors, but they haven't been gems for fund companies either. When the Nasdaq peaked in March 2000 the average club fund had some $1.3 billion in its coffers, according to Morningstar. Today that's down to less than $500 million, thanks to investment losses and redemptions. That's about even with the average U.S. stock fund, but the rising tide of sputtering, embarrassing and unprofitable growth and tech funds being liquidated and merged away includes several club members.

Just this week, Berger Funds announced plans to merge away its (BENGX)New Generation fund, which gained 144% in 1999 and is down 50% over the past 12 months. The fund's manager, Mark Sunderhuse, is joining the long line of growth and tech managers in the unemployment line too.

The bottom line is that when the next bubble comes and we reach into our pocket for a checkbook, we should all, well, keep it in our pants.

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