CGM Focus Fund (1998 – 2012) Cumulative Return vs. S&P 500

CGM Focus Fund is the classic short-term RTM fund…Sole portfolio manager, Ken Heebner…Assets grew from $100 million at start to $6 billion in 2007, only to tumble to $1.7 billion by 2012…Fund return in 1998 – 2007, +917 percent; S&P 500 return,+ 78 percent; Great!…Then the music stops…Fund return in 2007 – 2011 – 51 percent, S&P 500 – 6 percent…Fund annual return for full period, 12.2 percent…With a return of more than 18 percent per year, the Fund was the best performing U.S stock fund of the decade. However, “the typical shareholder lost 11% annually.” (The Wall Street Journal, December 31, 2009.)

Fidelity Magellan Fund (1981 – 2012) Cumulative Return vs. S&P 500

Fidelity Magellan Fund is the classic long-term RTM fund. Offered publicly in 1980, following annual returns averaging 22 percent as a Fidelity “in-house” fund since 1964… . Managed by stock-picking legend Peter Lynch until 1990, with 588 per cent return versus 268 percent for S&P 500…. In 1990 assets of $12 billion, rose to $106 billion in 1999…. Return 1990-2011, 368 percent; S&P 500 487 percent. . . . In 2012 assets of $15 billion, down 85 percent from high of $105…. Fund annual re turn has lagged S&P since 1983-19 years…. Fund 9.7 percent, S&P 10.2 percent.

Janus Fund (1971 – 2012) Cumulative Return vs. S&P 500

Janus Fund made its mark as one of the “hottest” funds of the Information Age bubble of the late 1990s. .. . An 18.5 percent annual return for 1971-1999. Assets up from $400 million in 1998 to $43 billion as 2000 began. . . . Investors jump on the bandwagon. . . . Becomes principal buyer of large-cap tech stocks…. Subsequent cumulative return -28 percent, with S&P 500 up 7 percent… . Investors depart in droves. .. . In 2012 as sets $7.5 billion, off 82 percent from peak…. Since 1983, Fund annual return 9.6 percent, S&P 500 10.6 percent.

Legg Mason Value Trust Fund (1982 – 2012) Cumulative Return vs. S&P 500

Legg Mason Value Trust Fund was managed by investment pro Bill Miller from inception through early 2012 …only port folio manager in fund industry history to outpace S&P 500 for 15 consecutive years (1991–2005 inclusive). Assets soar from $600 million to $20 billion…. In 2006–2008, Fund cumulative return -56 percent loss compared to -22 percent for S&P 500. Assets collapse to $2.5 billion. Over entire history, Fund almost matches the market; annual return of 10.3 percent versus 10.6 percent for S&P 500.

PBHG Growth Fund (1986 – 2004) Cumulative Return vs. S&P 500

PGHG Growth Fund was run since inception in 1986 by Pilgrim Baxter’s Gary Pilgrim. When fund assets only $180 million in 1993 and turnover of 200 percent, validity of performance hard to establish. . . . As 671 percent cumulative return soars above S&P 500s 300 percent in 1988-1996, assets leap to $6 billion… . RTM strikes in 1996–1998, with a cumulative return of 6 percent versus 64 percent for S&P…. Even a monster (reported) gain of 92 percent in 1999 doesn’t stem the tide…. In 2000–2003, Fund return of -56 percent far exceeds S&P 500s-20 percent drop…. In 2003 Pilgrim and partner Har old Bradley settle charges of fraud and breach of fiduciary duty brought by the SEC.. . . When assets shrink to $800 million in 2004, Fund ceases operation.

T. Rowe Price Growth Stock (1951 – 2012) Cumulative Return vs. S&P500

T. Rowe Price Growth Fund is a classic growth fund man aged by a classy organization, but couldn’t avoid the ravages of RTM…. Started in 1950 by (yet another) investment legend, T. Rowe Price, by 1971 the fund’s cumulative investment return of +1648 percent surpasses the S&P 500 return of +1021 percent by more than 600 percentage points. .. . Assets soar to $1.2 billion-first no-load fund to reach the $1 billion milestone… RTM then begins… . Huge shortfall in 1971-1988—fund +172 percent, S&P 500 +470 percent. .. . Since then, Fund reverts almost precisely to the market mean… . Fund lifetime annual return +9.5 percent versus +9.2 percent for S&P 500…. A fund’s long-term return can’t be too much closer to the market mean than that!

Vanguard Windsor Fund (1959 – 2012) Cumulative Return vs. S&P500

Vanguard Windsor Fund was Wellington Management’s first equity fund. . . . Formation makes headlines in 1958.. .. A rare mutual fund that has made it through more than a half century with objectives essentially intact. . . . A 7 percent annual return lagged the 10 percent return of the S&P 500 during 1958-1963… . Yet another legendary investor, John B. Neff, be comes the Fund’s manager… . Returns soared through 1988… with $4 billion of assets in 1985, became the industry’s largest equity fund. . . . Then closed to new investors to avoid handicap of excessive assets… . With remarkable 31-year annual return of 14 percent versus 11 percent for S&P 500, Neff retires in 1995…. Assets grow to $21 billion in 1997, even as performance falters badly in 1997–1999, only to recover nicely in 1999 2000…. Assets dwindle to $12 billion in 2012…. Post-Neff annual returns: Fund 6.5 percent; S&P 500 6.5 percent…. Inferior returns turn to superior; then back to inferior; then average. Yet again, RTM strikes.

Vanguard U.S. Growth Fund (1960 – 2012) Cumulative Return vs. S&P500

Vanguard U.S. Growth Fund began in 1958 as Ivest Fund.

Wellington Management acquires its manager in 1966….Cumulative return during 1961–1967 best in the entire mutual fund industry; 327 percent versus 108 percent for the S&P 500…. Pummeled in the 1973-1974 crash: -55 percent versus -35 percent for the S&P 500. Pedestrian recovery. . .. Cumulative return 1960–1976: Fund 238 percent; S&P 218 percent. RTM strikes again…. Name changed to Vanguard Growth Fund in 1980, then became a separate U.S. Growth portfolio…. New manager in 1987. . . . Fund and S&P 500 both rise 18 percent per year in 1987–1999.. . . Then fund falters again in 1999 – 2012. Fund return – 45 percent versus +7 percent for the S&P500. From first in 1967 to worst in 2003.