Independent Research Provider Releases Fourth Quarter 2004 SPIVA Report

    NEW YORK, Jan. 18 /PRNewswire/ -- Benchmark indices outperformed actively
managed mutual funds in all but one style box in 2004, Standard & Poor's, the
leading provider of independent investment research, ratings and indices,
announced today.  As determined by Standard & Poor's Indices Versus Active
Funds Scorecard (SPIVA), equal and asset-weighted average returns for active
funds lagged benchmarks in 8 out of 9 investment styles in 2004, the exception
being large-cap growth. The 2004 results are in contrast to 2003, where a
majority of active funds outperformed indices in 5 out of 9 style boxes,
indices outperformed active funds in 3 style boxes, and where one category was
a tie.
    Year-to-date, through December 2004, the S&P Composite 1500 outperformed
51.4% of actively managed domestic equity funds, the S&P 500 outperformed
61.6% of actively managed large-cap funds, the S&P MidCap 400 outperformed
61.8% of actively managed mid-cap funds, and the S&P SmallCap 600 outperformed
85.0% of actively managed small-cap funds.
    "In the fourth quarter of 2004, the S&P 500 Index returned 9.23%,
representing 85% of the total return for the year (+10.87%)," says Rosanne
Pane, Mutual Fund Strategist at Standard & Poor's.  "The impressive rally
after the election favored the growth style, and helped large-cap growth funds
outperform their index for the year."
    Standard & Poor's also determined that longer-term results are consistent
with past results.  Over the past three years, the S&P Composite 1500 has
outperformed 59.9% of all domestic equity funds, the S&P 500 has outperformed
68.9% of large-cap funds, the S&P MidCap 400 has outperformed 79.1% of mid-cap
funds, and the S&P SmallCap 600 has outperformed 76.8% of small-cap funds.
Similarly, over the past five years, indices have outperformed 56.4% of all
domestic equity funds, 58.7% of large-cap funds, 84.2% of mid-cap funds, and
72.4% of small-cap funds.

    Survivorship
    A key attribute of the SPIVA methodology is its correction for
survivorship bias, which can significantly skew results as funds liquidate or
merge. 2004 results of survivorship and style consistency also contrast with
those of 2003. Mergers and liquidations of funds slowed down in 2004. The
percent of general equity funds merging or liquidating in 2004 was 5.2%,
compared to 7.4% in 2003. The percent of sector funds merging or liquidating
in 2003 was 5.4%, compared to 12.0% in 2003. Also, funds were more style
consistent in 2004 across all categories. Style consistency of actively
managed domestic equity funds was 88.8% in 2004 compared to 72.2% in 2003.
    "Mergers and liquidations of funds slowed down in 2004," says Srikant
Dash, Index Strategist at Standard & Poor's. "The percent of actively managed
equity funds merging or liquidating in 2004 was 5.2%, compared to 7.4% in
2003. In addition, mutual funds were also more style consistent, with 88.8% of
funds staying in their investment style in 2004 compared to 72.2% in 2003."
    The complete fourth quarter SPIVA scorecard, as well as previous quarterly
SPIVA reports, including SPIVA Japan scorecards is available on
http://www.spiva.standardandpoors.com.

    About SPIVA
    The SPIVA scorecard reveals quarterly performance data for domestic equity
mutual funds benchmarked against nine corresponding S&P indices and eight
sector indices, including the S&P 500 for large-cap funds, the S&P MidCap 400
for mid-cap, the S&P SmallCap 600 for small-cap, and the S&P Composite 1500
for broad market comparisons. The S&P/BARRA growth and value indices are used
for style categories. S&P 500 sector indices and the S&P REIT index are used
for sector categories.
    The SPIVA methodology is designed to provide an accurate and objective
apples-to-apples comparison of funds' performance versus their appropriate
style indices, correcting for factors that have skewed results in previous
index-versus-active analyses in the industry.  SPIVA scorecards show both
asset-weighted and equal-weighted averages, include survivorship bias
correction to account for funds that may have merged or been liquidated during
the period under study, and show style consistency for each style group across
different time horizons.

    About Standard & Poor's
    Standard & Poor's, a division of The McGraw-Hill Companies (NYSE: MHP), is
the world's foremost provider of independent credit ratings, indices, risk
evaluation, investment research, data and valuations.  With 6,000 employees
located in 21 countries, Standard & Poor's is an essential part of the world's
financial infrastructure and has played a leading role for more than 140 years
in providing investors with the independent benchmarks they need to feel more
confident about their investment and financial decisions.  For more
information, visit http://www.standardandpoors.com.