Daily Screen: Communications Funds

Tuesday, the Daily Screen turns to communications funds at what appears to be an awkward time for the category.

Communications funds, also known as telecommunications funds, typically have fairly broad leeway and can invest in hot slivers of the tech/telecommunications sectors, such as wireless, Internet and media stocks. That led to great returns last year when the average communications fund rose more than 70%, according to Morningstar. But this year has been tough, as many of last year's favorites have cooled. The average communications fund is down 9.9% with many of last year's hottest performing funds down much further.

Consequently, the Screen, which usually sifts each category for funds that beat their average peer over the past one- and three-year periods, only came up with two winners: (FSDCX)Fidelity Select Developing Communications and (ISWCX)Invesco Telecommunications. So this screen focuses on the top funds over the past three years, ranking funds by their one-year performance so you can see how hard some of these funds have been hit this year.

As usual, the second table lists the 10 most-popular stocks among the funds that beat their peers over the last three years. It was compiled by creating an equally weighted portfolio of the funds and screening for their 10 biggest holdings. As you might expect, there are plenty of wireless stocks, but also a smattering of tech and Net titans like Cisco Systems (CSCO) and America Online (AOL).

Leading Communications Funds Here are the six communications funds that beat their average peer over the last three years.
Fund	1-Year Return	3-Year Return*
(FSDCX)Fidelity Select Developing Communications	84.8%	52.8%
(ISWCX)Invesco Telecommunications	75.7	55
(WPGTX)Warburg Pincus Global Telecommunications	46.8	56.1
(PRMTX)T. Rowe Price Media & Telecommunications	28.9	35.7
(GICPX)Gabelli Global Growth	18	34.8
(FTEBX)Flag Investors Communications	5.7	34
Average Telecommunications Fund	29	33.3
S&P 500	11.9	16.5
*Annualized Source: Morningstar. Performance figures through Sept. 29.

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Under the Hood Most popular stocks of the funds listed above.
Stock	Weighting	Number Above Funds That Own the Stock
SBC Communications(SBC)	2.3%	3
Cisco Systems(CSCO)	2.2	4
America Online(AOL)	2.1	4
Juniper Networks(JNPR)	1.7	2
JDS Uniphase(JDSU)	1.7	3
US West(USW)	1.4	3
Vodaphone Airtouch(VOD)	1.4	3
Motorola(MOT)	1.3	3
Nokia(NOK)	1.2	4
VoiceStream Wireless(VSTR)	1.2	4
Source: Morningstar. Holdings as of most recent portfolio reports.

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