Spooked by the severe decline in equity markets before the Dow's stunning 489-point rally last week, mutual fund shareholders have been busy dialing into their fund companies. Call volumes at most fund groups spiked significantly during the week of July 15 and again last week as nervous investors redeemed shares, exchanged into bond and money market funds and sought reassurance, fund executives said.

At least two fund companies reported that call volumes had increased to levels rivaling the near-record level of phone calls in the first days after the Sept. 11 terrorist attacks. But this time, instead of asking whether their investments are safe, investors are asking if and when the market will stop hemorrhaging.

"This time the biggest question is Where's the end to this thing?'" said Brian Lewbart, a spokesman at T. Rowe Price in Baltimore.

Over the past nine weeks, investors in equity mutual funds have seen the stock market free fall, with the Dow Jones Industrial Average sinking to 7,700, its lowest level since October 1998. The Dow sank a stunning 390 points on July 19 - the index's seventh-largest decline in its history - and then another 234 points on the following trading day of July 22. In the market crash of October 1987, the Dow declined 508 points in a single day.

The S&P 500 and tech-laden Nasdaq stock indexes also plunged lower, reverting to levels not seen since May 1997.

Not only has the steep drop in the markets prompted investors to call their fund companies, but many investors have just received quarterly account statements showing sharp declines, executives said. According to Lipper of New York, the average diversified U.S. stock fund lost 11.67% of its value in the first half of 2002 ended June 30. The market's mid-July declines just added insult to injury.

At T. Rowe Price, calls from retail fund investors were up 20% over projected call volume and 40% ahead of projections for 401(k) plan participants, who tend to be more reactive, Lewbart said. Now 2-1/2 years into a bear market, many investors who haven't ever seen a down market are becoming increasingly concerned, he said. "People are looking for handholding, someone to be there and provide guidance," Lewbart said.

While T. Rowe hasn't seen any panic selling, it has seen a significant number of shareholders exchanging out of equity funds into bond and money funds. In fact, the recent mid-July level of exchange activity was the highest T. Rowe has seen since August 1998, Lewbart said.

In response to investor questions about if and when the market decline will end, T. Rowe phone representatives are declining to speculate when the market will turn around, Lewbart said. Instead, T. Rowe representatives are asking investors about their specific investment goals and time horizons, Lewbart said. Reps have been explaining why buy and hold is important, he said.

T. Rowe reps have also been providing investors with information about alternative investments, such as T. Rowe's real estate fund, which investors have been increasingly inquiring about, he said.

In response to the dissolving market, in late June T. Rowe added a market commentary to its Web site from Chief Investment Officer David Testa. In his commentary, Testa asks investors to think before they leap. "We do not know if we are near the end of a market decline, but we would caution investors not to be overly emotional in responding to this environment," Testa said. "This is not the time to be stampeded out of an appropriate investment plan."

A letter with somewhat similar sentiment was posted in mid-July at the Web site of American Century Investments of Kansas City, Mo. Randy Merk, president of the firm and its chief investment officer, reminds investors to act with reason and perspective, and resist "the urge to dump stocks." He also reminds investors about rebalancing their portfolios to a comfortable equity-to-fixed-income ratio.

In reaction to the July 19 Dow decline, American Century saw a marked increase in phone calls, at levels similar to those just after Sept. 11, said Laura Kouri, a spokeswoman for the firm. American Century representatives found they needed to spend more time on the phone with investors, to try to allay their fears about the market, Kouri said.

"Our reps are trying to educate folks about what to do, asking about time horizons and advising accordingly," Kouri said. American Century also reported an increase in exchanges and fund redemptions during this period.

While Fidelity Investments of Boston won't release figures for the number of daily phone calls it receives from investors, a Fidelity spokeswoman said that the volume of phone calls had been "manageable."

Janus Capital of Denver also reported that the firm has seen only a modest increase in calls, and that the purpose of the calls included exchanging or redeeming funds.

Dreyfus Corp. of New York reported a 25% increase in phone calls in mid-July, but said that only one in four of those additional callers made a transaction. "Dreyfus is encouraging investors to examine their personal investment objectives and, for long-term investors, to remain invested," said Patrice Koslowski, a spokeswoman for Dreyfus.

On the other hand, it's a different world at predominantly fixed-income fund groups. Call volume picked up only slightly at Madison Investment Advisors of Madison, Wisc., advisor to the 13 Mosaic Funds with a combined $205 million in assets. About two-thirds of the fund group's assets are in fixed-income funds.

"We see people moving money to us, particularly into the government bond fund, and [becoming] more conservative in their allocations. But they haven't gone to 100% in money market funds," said Larry Tabak, vice president. Requests for prospectuses have been running higher over the past three weeks than during the usually busy IRA season of March and April, he said. "People aren't necessarily abandoning the stock market, but they are looking for managers who can manage in a down market," he said.

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