The average annual expense ratio of U.S. mutual funds last year rose to 1.266%, up from 1.249% in 2001, according to a report Lipper released yesterday.

"Expense ratios have increased, and that’s because the average net assets have fallen," Jeff Tjornehoj, an analyst with Lipper, told Reuters, which reported the fact in Lipper’s 240-page report, "Global Themes in the Mutual Fund Industry." Equity funds lost nearly 21% in value, their worst performance since a 25% decrease in 1974, according to the report.

Investment Company Institute Chairman Paul Haaga testified in Congress earlier this month that the "market readily enables investors to find lower-cost mutual funds" (see MFMN 3/17/03).

Where in the world does Lipper think the U.S. mutual fund industry has the biggest opportunities for growth? Look for the answer in the coming Monday issue of Mutual Fund Market News.

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